Use the Hamiltons Data Set to compute the following: a. The rate of inventory turnover for 2014.
Question:
Use the Hamilton’s Data Set to compute the following:
a. The rate of inventory turnover for 2014.
b. Days’ sales in average receivables during 2014.
Hamilton’s Data Set
Hamilton’s, a home- improvement store chain, reported these summarized figures (in billions):
Hamilton's Balance Sheets December 31, 2014 and 2013 ts in thousands 2013 4 5 6 7 Current assets: 8 Cash 9 Short-term investments 10 Accounts receivable 11 Inventory 12 Other current assets 13 Total current assets 14 Other non-current assets 15 Total assets 16 17 8 Current liabilities: 19 Accounts payable 20 Notes payable 21 Accrued liabilities 22 Total current liabilties 23 Long-term liabilities 24 Total liabilities 25 26 27 Common stock, no par 28 Retained eamings 29 Total stockholders' equity 30 31 Total liabilities and equity 32 2014 Assets $1,290,000800,000 260,000 293,500 4120,000 402,500 5,876,000 12,600,00011,690,000 202,000 100,000 4,650,000 503,000 ,745,000s $19345,000 17566,0 Liabilities $3150,000$ 2,985,000 657,000 38,000 3,680,000 4,214000 910,000 360,000 4420,000S3 4294,000 8714,00 7894,000 Stockholders' equity 2,505,000S 1,000,000 8672000 10,631,000S 9,672000 $ 19,345,000S 17,566,000
Step by Step Answer:
a b Days sales in receiva...View the full answer
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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