Footpedal Enterprises has been in business for five years. This past year was the best year yet, as demonstrated by several indicators shown below.
|
2005 |
2004 |
2003 |
2002 |
2001 |
|
|
Inventory turnover |
5.2 |
4.7 |
4.3 |
4.5 |
4.1 |
|
Accounts receivable turnover |
6 |
5.7 |
5.4 |
5.4 |
5.3 |
|
Gross profit margin |
23.2 |
22.8 |
22.9 |
22.6 |
21.8 |
|
Operating profit margin |
12.1 |
12 |
11.9 |
11.8 |
11.9 |
Your new assistant wonders why upper management is so happy that the inventory turnover, the accounts receivable turnover, the gross profit margin, and the operating profit margin all increased this year. Explain why an increase in each of these items is a positive indicator.