Inventory Analysis 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 $96,360 $123,800 Cost of goods sold 80,300 116,800 Inventory, beginning of period 3,518 14,288 Inventory, end of period 3,918 16,688 a. Determine for both companies (1) the inventory turnover and (2) the number of days' sales in inventory. Round your calculations and answers to one decimal place. Assume 365 days a year. QT Elppa 1. Inventory turnover 2. Number of days' sales in inventory days days b. QT has a higher inventory turnover ratio than does Elppa Company. Likewise, QT has a smaller number of days' sales in inventory. Feedback Check My Work a 1 Divide the cost of goods sold by the average inventory Average inventory (Beginning inventory Ending inventory) - 2 a 2. Divide the average inventory by the average daily cost of goods sold Average inventory = (Beginning inventory + Ending inventory) - 2. Average daily cost of goods sold cost of goods sols - 365 days b. Consider the relationship of the accounts involved Consider the differences between the two companies