Boosting profitability through smart inventory management.
Dr. Sharma noticed a significant amount of expired and unused medical supplies accumulating in her practice. She suspected that overstocking certain items and inefficient inventory management were tying up valuable capital and impacting her bottom line, especially considering her $280,000 student loan burden and wanting to maximize profits from her practice. She wasn't sure how much these inefficiencies were costing her.
Using Golden Door Asset's Inventory Turnover Calculator, Dr. Sharma calculated her inventory turnover rate. Initially, it was a low 2.5, indicating slow sales and excessive inventory. After analyzing the data, she adjusted her ordering habits, implemented a 'first-in, first-out' system, and negotiated better terms with suppliers. This increased her inventory turnover rate to 4.0, freeing up cash and reducing waste.
The Inventory Turnover Calculator required inputting the cost of goods sold and the average inventory value. Dr. Sharma then used the Times Interest Earned Ratio Calculator to assess her ability to cover interest expenses with the increased earnings. Finally, she modeled different scenarios with the Debt-Service Coverage Ratio Calculator to see if she could accelerate her student loan payments.
$15,000 increase in annual profit by optimizing inventory and reducing waste; freeing up $10,000 in cash flow.
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