Heineken Electronics has enjoyed tremendous sales growth during the last 10 years.
However, even though sales have steadily increased, the company€™s CEO, Beth Dains, is concerned about certain aspects of its performance. She has called a meeting with the corporate controller and the vice presidents of finance, operations, sales, and marketing to discuss the company€™s performance. Beth begins the meeting by making the following observations:
We have been forced to take significant write-downs on inventory during each of the last three years because of obsolescence. In addition, inventory storage costs have soared. We rent four additional warehouses to store our increasingly diverse inventory. Five years ago inventory represented only 20% of the value of our total assets. It now exceeds 35%.
Yet, even with all of this inventory, €œstock outs€ (measured by complaints by customers that the desired product is not available) have increased by 40% during the last three years. And worse yet, it seems that we constantly must discount merchandise that we have too much of. Beth asks the group to review the following data and make suggestions as to how the company€™s performance might be improved.

Instructions
Using the information provided, answer the following questions.
(a) Compute the current ratio, gross profit rate, profit margin, inventory turnover, and days in inventory for 2012, 2013, and 2014.
(b) Discuss the trends and potential causes of the changes in the ratios in part (a).
(c) Discuss potential remedies to any problems discussed in part (b).
(d) What concerns might be raised by some members of management with regard to your suggestions in part(c)?

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(in millions) Inventor 2014 2013 2012 2011 Raw materials $242 116 567 $198 $155 49 398 $602 $128 Work in process Finished goods 482 257 Total inventory $925 S757 $418 Current assets Total assets Current liabilities Sales revenue Cost of goods sold Net income $1,800 $2,643 $600 $9,428 6,328 $754 $1,423 $2,523 S590 $8,674 $5,474 S987 $1,183 $2,408 $525 $7,536 $4,445 $979 $841 $2,090 $420 $6,840 $3,557 $958