Inventory analysis Obj. 3 QT, Inc. and Elppa Computers, Inc. compete with each other in the personal computer market. QT assembles computers to customer orders, building and delivering a computer within four days of a customer entering an order online. Elppa, on the other hand, builds computers for inventory prior to receiving an order. These computers are sold from inventory once an order is received. Selected financial information for both companies from recent financial statements follows (in millions):

QT Elppa Sales $56,940 $120,357 Cost of goods sold 44,754 92,385 Inventory, beginning of period 1,382 6,317 Inventory, end of period 1,404 7,490

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 in the context of both companies’ operating strategies.

AppendixLO1