Ericsson Nikola Tesla d.d.,2013 Annual Report, I chose to use the Financial Rati

Question

Ericsson Nikola Tesla d.d.,2013 Annual Report, I chose to use the Financial Ratio, Days of Inventory. DOI uses the Cost of Good Sold (GOGS) from the Income Statement and the Average Inventory from the Balance Statement, that answer is divided by 365 or 1,345,226m / 51,506m / 365 = .0716. Is this ratio high or low and how would I know unless I compare similar organization in the telecommunication industry? This is for my final paper due Monday night.

Ericsson is located in Croatia and "m" represents millions, HRK is their currency.

Explanation / Answer

it look like the calculation is incorrect.

it should be:

DOI = 51,506m x365/ 1,345,226m = 13.98 days.

Now you need to compare this DOI with similar companies or industries to find out whether it is high or low.

However, on an average DOI varies in between 20 to 30 days, so looking at DOI of Ericsson Nikola Tesla, it is low.

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

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