The comparison of inventory tumover ratios shows that other firms in the industry seem to be getting along with about har as much inventory per unit of sales as the firm. If the company's inventory could be reduced, this would generate funds that could be used to retire debt, thus reducing interest charges and improving profits, and strengthening the debt position. There might also be some excess investment in fixed assets, perhaps indicative of excess capacity, as shown by a slightly lower-than-average fixed assets tumover ratio. However, this is not nearly as clear-cut as the overinvestment in inventory.
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