Dell Inc. and Hewlett-Packard Company (HP) compete with each other in the personal computer market. Dell's primary strategy is to assemble computers to customer orders,

Question

40 users unlocked this solution today!

Dell Inc. and Hewlett-Packard Company (HP) compete with each other in the personal computer market. Dell's primary strategy is to assemble computers to customer orders, rather than for inventory. Thus, for example, Dell will build and deliver a computer within four days of a customer entering an order on a Web page. Hewlett-Packard, on the other hand, builds some computers prior to receiving an order, then sells from this inventory once an order is received. Below is selected financial information for both companies from a recent year's financial statements (in millions):

(a) Determine for both companies(1) The inventory turnover and(2) The number of days' sales in inventory. Round to one decimal place(b) Interpret the inventory ratios by considering Dell's and Hewlett-Packard's operating strategies.

Hewlett-Packard Dell Inc. Company $73,557 69,427 6,877 7,750 Sales Cost of goods sold Inventory, beginning of period Inventory, end of period $57,420 47,904 588 660