PepsiCos financial statements are presented in Appendix A. Financial statements of The Coca-Cola Company are presented in
Question:
PepsiCo’s financial statements are presented in Appendix A. Financial statements of The Coca-Cola Company are presented in Appendix B.
Instructions
(a) Based on the information contained in these financial statements, compute the following 2010 ratios for each company.
(1) Inventory turnover ratio.
(2) Days in inventory.
(b) What conclusions concerning the management of the inventory can you draw from these data?
Step by Step Answer:
a P ep si Co In ventory Turn over Ratio Cost of Goods Sold Average Inventory 26 9 ...View the full answer
Financial and managerial accounting
ISBN: 978-1118016114
1st edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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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