Question
Making Business Decisions: Analyzing Apples Inventory Turnover Ratio You are considering an investment in the common stock of Apple Inc. The following information is from
Making Business Decisions: Analyzing Apples Inventory Turnover Ratio
You are considering an investment in the common stock of Apple Inc. The following information is from the financial statements included in Form 10-K for fiscal years 2015 and 2014 (in millions of dollars):
Cost of sales for the year ended: | |
September 26, 2015 | $140,089 |
September 27, 2014 | 112,258 |
Inventories: | |
September 26, 2015 | 2,349 |
September 27, 2014 | 2,111 |
September 29, 2013 | 1,764 |
The following information is from the financial statements included in Form 10-K for fiscal years 2015 and 2014 for Hewlett-Packard Company (in millions of dollars):
Cost of sales for the year ended: | |
October 31, 2015 | $53,081 |
October 31, 2014 | 56,469 |
Inventory: | |
October 31, 2015 | 6,485 |
October 31, 2014 | 6,415 |
October 31, 2013 | 6,046 |
Use 360 days a year.
Required:
1. Calculate the inventory turnover ratios for Apple Inc. and Hewlett-Packard Company for the years ending September 26, 2015 and October 31, 2015, respectively. If required, round your answers to one decimal place.
Apple Inc.: | ____times |
Hewlett-Packard: | _____times |
2. Which company appears to be performing better? A. Helett-Packard
B. Apple Inc.
3. Assume Company A has an inventory turnover ratio of 52.8 times and Company B has inventory turnover ratio of 12.6. Based on this information, which of the following statement is correct?
A. Company A is performing better, when it comes to inventory management.
B. Company B is performing better, when it comes to inventory management.
C. Company A sells its product every 6.2 days.
D. Company B sells its products every 4.9 days.
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