Final answer:
Measures useful in assessing inventory management include the inventory turnover ratio, days of inventory, and GMROII, which inform on efficiency and profitability.
Step-by-step explanation:
Assessing inventory management is crucial for ensuring the efficiency and profitability of a business. There are several measures and ratios that can be useful:
- Inventory turnover ratio: This measures how many times inventory is sold and replaced over a period. A higher turnover indicates efficient inventory management.
- Days of inventory: Represents the average number of days the company holds inventory before selling. Lower days of inventory signifies a quicker turnover.
- Gross Margin Return on Inventory Investment (GMROII): This ratio assesses the gross margin earned for every dollar of inventory invested, illustrating the profitability of inventory investment.
These measures allow businesses to analyze various aspects of inventory management, from efficiency to profitability, and make informed decisions.