Apple: Current year(inventory $1,764, Cost of sales 106,606 ) one year prior ( I

Question

Apple: Current year(inventory $1,764, Cost of sales 106,606 ) one year prior ( Inventory $791, Cost of sales 87,846) Two years prior (inventory $776, Cost of Sales 64,431)

Google: Current Year (inventory $426, Cost of sales 25,858) One year prior (inventory $505, Cost of sales 20,634) Two years prior (inventory $35, Cost of sales 13,188)

1. Compute inventory turnover for each company for the most recent two years shown.

2. Compute days' sales in inventory for each company for the three years shown.

3. Comment on and interpret your findings from parts 1 and 2. Assume an industry average for inventory turnover of 40.  

(Comparative figures for Apple and Google)

Explanation / Answer

Apple Google Industry Average ref Particulars Current One year Two Year Current One year Two Year a) Inventory 1764 791 776 426 505 35 b) Cost of Sales 106606 87846 64431 25858 20634 13188 c) Inventory Turn Over = Cost of sales/ Inventory = b)/a)         60.43      111.06         83.03         60.70         40.86      376.80 40 d) Days sales in inventory = inventory/ cost of goods sold*365 = a)/b) *365                 6                 3                 4                 6                 9                 1                 9 ( Rounded off to nearest day) Where the inventory turn over is high and there the inventory carrying cost will be less as it can get many advantages like JIT etc., In Current year Both Apple and Google are at par in days in inventory but less than the Industrial average but google has at par in one year with Industry.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.