TURNOVER版本.docVIP

三、Assent management or turnover ,measures in of Wuhan?Iron??Steel Company Limited Asset utilization ratios provide measures of management effectiveness. These ratios serve as a guide to critical factors concerning the use of the firms assets, inventory, and accounts receivable collections in day-to-day operations. Asset utilization ratios are especially important for internal monitoring concerning performance over multiple periods, serving as warning signals or benchmarks from which meaningful conclusions may be reached on operational issues.  Inventory Turnover and Days’ sales in Inventory Inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year. The equation for inventory turnover equals the cost of goods sold divided by the average inventory. A low turnover rate may point to overstocking HYPERLINK /wiki/Inventory_turnover \l cite_note-1[2]in the company. In some occasions, a low rate may be possible where higher inventory levels occur in anticipation of rapidly rising prices or shortages. A high turnover rate may indicate inadequate inventory levels, which may lead to a loss in business. However, if there sufficient stock, the higher this ratio is ,the more efficiently the company is managing inventory. From 2007 to 2009, the inventory turnover Wuhan iron steel stock co .Ltd went up from 4.96 to 6.83, which was 0.93 higher than industry average. It indicates that Wuhan iron steel stock co .Ltd is going through its inventory more often due to higher sales. Days’ sales in inventory is a measure of the average days to sell the inventory .From 2007 to 2009 the Days’ sales in inventory of Wuhan iron steel stock co .Ltd dropped from 73.50 to 53.53,which was 19.29 lower than the industry average .Roughly speaking ,at current daily sales ,it would take Wuhan iron steel stock co .Ltd 63.5 days to deplete the available inventory .Note that, Wuhan iron steel stock co .Ltd had some advantages of selling its