Comparative figures for Research In Motion and Apple follow. Required 1. Compute inventory turnover for each company
Question:
Comparative figures for Research In Motion and Apple 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 of10.
Research In Motion Apple Current One Year Two Years Current OneYear Two Years ($ millions) Year Prior Prior Yeat Prior Prior S622 $ 682 $ 396 455 8,369 509346 16.426 5,968 2.929 25,683 24.294
Step by Step Answer:
1 2 3 For all years examined here Apple manages its inventory more ef...View the full answer
Fundamental Accounting Principles
ISBN: 978-0078110870
20th Edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
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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