Question

Choose and describe a business that would have a significant amount of inventory and share a photo of that business (or company logo). Briefly explain whether you expect the business uses a periodic or perpetual inventory system, and why. If the image is not your own, be sure to cite the source in your description.

Answer 1

Retail Business - A retailer is someone that fills the small orders of a large number of individuals, who are end-users. Retail Business would involve a huge amount of Fixed Costs such as Rent, Depreciation, Salaries etc. Profits in retail business are generally volume-driven. Thus, to make profits, retail business would have to sell a good amount of merchandise inventories. It becomes pertinent to maintain a significant amount of inventory and a good inventory turnover ratio.

Company Logo Source: www.walmart.com

For retailers with rapid inventory turnover like Walmart, waiting a month or even a week to know what's on hand isn't good enough. Therefore, a perpetual inventory system is expected to be used in such businesses.