CanGo with its current inventory turnover ratio of only 0.28 needs to consider making some changes to its inventory policy to increase this rate. This number will send up a red flag to an investor or financing company as to their ability to sell their products. CanGo is a new company though and this number may just be low simply because they are so new. Generally a low inventory turnover ratio indicated one of two things, either they are having troubles selling their products which would also be notable in other ratios or they are keeping way to much stock on hand. Keeping too much stock on hand means paying un-needed storage and warehousing costs. Given that CanGo has a high sales revenues of 51,000,000 reported on its income statement it is likely that because they are a new company they are simple just overstocked and need to find a good balance of how much inventory they really need to keep on hand (CanGo,
CanGo with its current inventory turnover ratio of only 0.28 needs to consider making some changes to its inventory policy to increase this rate. This number will send up a red flag to an investor or financing company as to their ability to sell their products. CanGo is a new company though and this number may just be low simply because they are so new. Generally a low inventory turnover ratio indicated one of two things, either they are having troubles selling their products which would also be notable in other ratios or they are keeping way to much stock on hand. Keeping too much stock on hand means paying un-needed storage and warehousing costs. Given that CanGo has a high sales revenues of 51,000,000 reported on its income statement it is likely that because they are a new company they are simple just overstocked and need to find a good balance of how much inventory they really need to keep on hand (CanGo,