Inventory Turnover Of Fortune 500 Manufacturing Companies After 2001 And Its Relationship To Net Earning

Abstract

In order to determine whether the largest United States manufacturers had changed their inventory policies after the terrorist attacks in 2001, averages of inventory turnover ratios of 157 manufacturing companies in the 2002 Fortune 500 list (2001 ranking) calculated for the 3-year pre-2001 (1998 to 2000) period were compared with that of the 3-year post-2001 (2002 to 2004) period in aggregate, by the 2001 Fortune 500 ranking and by industry using paired-samples t-tests. Overall results indicate that there is no significant change in inventory turnover before and after 2001. This is in contrast to the significant inventory reduction found in the two decades before 2001 as reported in previous literature. However, the finding in this study that inventory turnover is not related to net earning is consistent with other studies. Possible explanations and areas for future research are also discussed.