The following figures are taken from the financial statements of McDonald’s and Wendy’s.

Figures are in million dollars.

a. What were McDonald’s inventory turns in this year? What were Wendy’s inventory turns?

b. Suppose it costs both McDonald’s and Wendy’s $3 (COGS) per their value meal offerings, each sold at the same price of $4. Assume that the cost of inventory for both companies is 30 percent a year. Approximately, how much does McDonald’s save in inventory cost per value meal compared to that of Wendy’s? You may assume the inventory turns are independent of the price.

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Inventory Revenue Cost of goods sold Gross profit McDonald's $ 129.4 17,140.5 11,943.7 5,196.8 Wendy's $ 54.4 3,148.9 1,634.6 1,514.4