Comparative figures for Apple and Microsoft follow. Required 1. Compute inventory turnover for each company for the
Question:
Comparative figures for Apple and Microsoft follow.
Required
1. Compute inventory turnover for each company for the most recent two years shown.
2. Compute days' sales in inventory for each company for the three years shown.
3. Comment on and interpret your findings from parts 1 and 2. Assume an industry average for inventory turnover of 15.
Apple Microsoft Current One Year Two Years Current One Year Prlor Two Years Prior $ millons Year Prior Year Prior S 2,349 2,111 1764 2,902 2,660 33.038 $1,938 40,089112,258 106,606 27,078 20,385
Step by Step Answer:
millions 1 2 Current year x Microsofts days sales in inventory 290233038 x 365 3206 days One year pr...View the full answer
Fundamental Accounting Principles
ISBN: 978-1259536359
23rd edition
Authors: John Wild, Ken Shaw, Barbara Chiappett
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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