If the CEO of a firm were filling out a fitness report on a division manager (i.e., "grading" the manager), which of the following situations would be likely to cause the manager to get a BETTER GRADE? In all cases, assume that other things are held constant.
A. | The division's inventory turnover is 8, whereas the average for competitors is 6. | ||
B. | The division's DSO (days' sales outstanding) is 40, whereas the average for competitors is 30. | ||
C. | The division's total assets turnover ratio is below the average for other firms in the industry. | ||
D. | The division's debt ratio is above the average for other firms in the industry. | ||
E. | The division's current ratio is below the average of other firms in the industry. |
The below situation will give division manager better rating. Rest all options will give a bad rating to the manager
A. The division's inventory turnover is 8, whereas the average for competitors is 6. :
This means the inventory does not sit for much days in stock. The goods are sold quickly as they are manufactured or purcashed as compared to competitors. Or the invenstory is that good so that the inventory storage period is very less reducing the cost for the co.
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