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Unformatted text preview: A sufficient ratio for a company is usually between 1.0 and 2.0. Abercrombie’s ratio is 1.93 and The Buckle’s ratio is 5.45. The company with the better ratio is Abercrombie, since The Buckle’s very high ratio shows an insufficient use of resources. Inventory Turnover The inventory turnover ratio shows how quickly product moves through a company’s inventory. The higher the ratio, the quicker a company sells its current inventory. The Buckle has an inventory ratio of 4.481, and Abercrombie has a ratio of 3.25. Therefore, The Buckle is able to move through their inventory better than Abercrombie. Gross Profit Ratio The gross profit ratio measures how much profit is gained for every dollar in sales. The higher the ratio a company has the higher their net income will be. The Buckle has a ratio of 0.3872 and Abercrombie’s is 0.665. Therefore, Abercrombie relies on charging premium prices to maintain their high net income....
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This note was uploaded on 03/27/2008 for the course ACCT 284 taught by Professor Clem during the Spring '08 term at Iowa State.
- Spring '08
- Earnings Per Share