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Analysis of Inventory Turnover as a Performance Measure in Manufacturing Industry

Title
Analysis of Inventory Turnover as a Performance Measure in Manufacturing Industry
Authors
Kwak, Jin Kyung
Ewha Authors
곽진경
SCOPUS Author ID
곽진경scopus
Issue Date
2019
Journal Title
PROCESSES
ISSN
2227-9717JCR Link
Citation
PROCESSES vol. 7, no. 10
Keywords
inventory turnovermanufacturingperformancesustainability
Publisher
MDPI
Indexed
SCIE; SCOPUS WOS
Document Type
Article
Abstract
Using an appropriate measure to assess firms' performance is essential. We analyzed inventory turnover (IT) as a performance measure in manufacturing processes because IT ratios are critical in the manufacturing industry and publicly available objective measures. Using the data of 421 manufacturing companies in Korea from 2010 to 2018, we conducted an extensive analysis of the factors affecting IT by segment and its correlation with other financial ratios. Then, we compare performances between the top and bottom companies determined by Altman's Z score approach. We found that, for the overall manufacturing industry, IT ratios were negatively correlated with gross margin and debt cost, but positively correlated with capital intensity, although the results varied by segment. Moreover, IT ratios did not show significant correlations with other financial ratios categorized for growth, profitability, stability, productivity, and value of companies. However, adjusted IT (AIT) can be a good indicator of firms' performance in terms of financial sustainability. Results also revealed that the top 10% companies showed higher AIT ratios than the bottom 10% in most segments of the manufacturing industry. The analysis of this study can be a starting point to search for a composite index to evaluate manufacturing processes comprehensively.
DOI
10.3390/pr7100760
Appears in Collections:
경영대학 > 경영학전공 > Journal papers
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