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Inventory turnover shows the number of times during the period a firm sells the entire dollar amount of its inventory. It is advantageous to
Inventory turnover shows the number of times during the period a firm sells the entire dollar amount of its inventory. It is advantageous to 'turnover' inventory more quickly to reduce the risk of obsolescence and spoilage. As such, companies often have a goal of increasing inventory turnover. Inventory turnover data for Costco, Walmart, Target, and Amazon are presented here for 2005 through 2019. Data for Costco and Amazon are not available for 2005. Costco Walmart Target Amazon COST WMT TGT AMZN 2006 11.56 7.84 6.57 9.41 2007 11.57 8.08 6.46 9.57 2008 12.60 8.81 6.83 10.65 2009 11.53 9.30 6.35 8.74 2010 12.06 8.64 6.13 8.30 2011 11.71 8.23 6.10 7.47 2012 12.24 8.04 6.46 7.62 2013 11.65 7.98 6.04 7.31 2014 11.64 8.09 6.19 7.56 2015 11.35 8.12 6.07 7.00 2016 11.47 8.39 5.91 7.70 2017 11.38 8.53 5.95 6.98 2018 11.16 8.70 5.61 8.10 2019 11.66 8.88 6.10 8.08 Use Excel to perform the following: a. Create a scatter plot with lines and markers for the data. Include a descriptive chart title, axes labels, properly formatted axes, and a legend. b. What trends can you identify in the inventory turnover of the four companies during the period? c. Calculate "Days' Sales in Inventory" for each year and each company. d. Which company is managing its inventory levels most effectively? What disadvantages can you identify that may result to high inventory turnover? Explain. 1
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