Marketing 13th Edition by Gary Armstrong, Philip Kotler

Exercise 1

Retailers need merchandise to make sales. In fact, a retailer's inventory is its biggest asset. Not stocking enough merchandise can result in lost sales, but carrying too much inventory increases costs and lowers margins. Both circumstances reduce profits. One measure of a reseller's inventory management effectiveness is its stockturn rate (also called inventory turnover rate for manufacturers). The key to success in retailing is realizing a large volume of sales on as little inventory as possible while maintaining enough stock to meet customer demands.
If this company's stockturn rate was 4.5 last year, is the stockturn rate calculated above better or worse? Explain. (AACSB: Communication; Reflective Thinking)