Asking for a Loan for a Business

Assuming weekly periodic review replenishment, a Lead time equal to four and a half weeks and a policy of satisfying 98 percent of customers demand from items in stock the safety stock would be:

|Inventory turnover |180,000/5000 |36 |N/A |Inventory turnover is calculated to determine how quickly the inventory is used based on the services rendered.|

Manufacturing does not have to worry about inventory over stock. With the rightful planning, there would be the proper amount of inventory at

3. A physical count of inventory on Dec 1, 2013 reveals that 100 units of inventory are available valued at $36,000. A physical count on Dec 31, 2013 reveals that 20 units are missing.

Starting Inventory plus purchases equal Goods available for sale minus the Ending inventory equal Items sold. Or 50 + 500 – 756 = 475.

Office Depot uses multiple inventory strategies to order products. 90% to 95% of goods are ordered through automatic replenishment, manual replenishment, pull replenishment, and global sourcing are also used depending on channel, volume, velocity and cost. (Office Depot, 2015). The accuracy of the inventory from both a DC and store perspective is critical to the organizations success. Heizer and Render (2014) state that record accuracy is a prerequisite to inventory management, production scheduling, and sales. Accuracy is maintained by either periodic or perpetual systems (p.479). In Office Depot, the stores are required to cycle-count technology items such as laptops, desktops computers, and tablets five days a week. Discrepancies are entered in the system and bounced off the local DC’s on-hand inventory discrepancies. Office Depot is a “blind receive” organization meaning the stores receive pallets of products and simply unwrap and put them away. The only way a store knows if a product is missing is through the cycle-count program. This system was put into place to speed up the receiving process and eliminate unnecessary steps once the product was received at the store level. Office Depot conducts a full physical inventory once a year through a third party and trues up the inventory shrink at this time.

There were increases in days’ sales in inventory for the three years that are shown. The data shows 0 days for 2005 and 2006; 4 days in 2007; and, a slight decrease from 7 days in 2008 to 6 days in 2009. This ratio estimates the number of days that it will take to sell the current inventory. Therefore, this low number, despite near constant sales, indicates good inventory control. Although this number could be understated because AT&T uses the natural business year for its accounting period, and the average daily cost of goods sold will be at a low point at this time of year.

2. The present value of the holding cost of inventory for the duration ofinitial replenishment cycle is

Financial reports consist of a statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows, notes, directors' declaration, directors' report and the auditor's report. The financial statements need to be prepared in accordance with applicable accounting standards, making the necessary disclosures in order to be transparent and fully inform readers about the activities and financial situation of the entity.

Financial statements of the company are significant for the investors who would like to venture into the business operation. It gives them the insight whether the business is making profits or it is doomed to fail;

Financial statement measures the financial performance, liquidity and strength of the firm, it is important

The balance sheet of a company reflects exactly what a company owns and what it owes to others, making it a very important thing to be considered for stock investment.

when a wide range of goods is put into each shipment and it offsets the smaller volume of bulk orders.

reduction in inventories of finished goods. In other words, if operating plans call for a buildup or

The Purpose of Financial Statements The financial statements of a business are used to provide information about the status of the business, set performance targets and impose restrictions on the managers of the firm as well as provide an easier method for financial planning. The financial statements consist of the Profit and Loss Account, Balance Sheet and the Cash Flow Statement. There are four areas of information, which we can collect from a company's financial statements. They are: Ÿ