Comparative Analysis Problem For Amazon

It can be served as a competitive advantage, which attracts more customers shifting from Amazon’s online retailer competitors into buying their products, thus increasing the market share.

In general, a high inventory turnover ratio is better than a low ratio. A high ratio implies good inventory management. A very low level of inventory has serious implications. It adversely affects the ability to meet customer demand as it may mot cope up with its customer requirements.

To consider this we need cost of goods sold; beginning and ending inventory. The higher the ratio or lower average days in inventory suggest that management is reducing the amount of inventory on relative to sales.

|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.|

5. Inventory Turnover: This ratio is rendered by taking the cost of goods sold, for a time period, divided by average inventory. This shows how many times a firms inventory is sold and replaced during the period of time that it is calculated for.

The difference indicates that CanGo is managing its inventory better than Amazon. The ratio helps the company to pinpoint efficient performance if the ratio is high, however, if the ratio is low, it indicates that there maybe overstocking, increase in returns or a loss of sales. The Equity Ratio gives a good indication that the company is performing well if the Debt to Equity Ratio is low. In this case CanGo is not performing at it best because Amazon’s ratio is equal to .44 whilst CanGo’s ratio is .67. If there is high Debt to Equity Ratio it means that the company has financed its growth using debt. Debt can be the result of many factors like borrowed income against stocks or bonds.

As three of America's leading retailers, Home Depot, Nordstrom, and Cold Water Creek, are responsible for over $80 billion in annual sales. Retail industry analysts look for commonalities in inventory management reporting in order to track company's ability to move inventory and maximize pricing strategies and avoid having to discount obsolescent inventory thus affecting profit. Through analysis of a company's inventory management ratio, outside investors and inside management can track the number of times each year a company turns its inventory. Industries such as retail are extremely sensitive to inventory management as many retail products have short shelf lives due to cyclical inventory and technological advances.

These ratios are used to measure companies’ operating cycle.() Firstly in 2012, the receivables turnover for Oroton and Country Road are 54.86 times per year and 93.02 times per year. This indicates that Country road can collect cash from their customer faster than Oroton. Secondly, the payables turnover for Oroton and Country Road are 12.15 and 8.44 times per years. And it would be easier to analyze day payables which Oroton’s is 30 days and Country road’s is 43 days. This ratio shows that Country road has longer credit term to pay their suppliers than Oroton. Finally, the inventories turnover for Oroton and Country Road are 54.86 and 93.02 times per year. It is obvious that Oroton takes longer time to sell all of their inventories than country road. All of these ratios indicate that Country road has shorter operating cycle than Oroton. Therefore, they tend to have higher performance in terms of liquidity because they can generate cash faster.

The inventory turnover is a ratio showing how many times a company´s inventory is sold and replaced over a period.“ The inventory turnover has been fairly stable over the last 5 years.

With this company the inventory management ratios further indicate that there may be an issue with inventory and inventory controls. The inventory turnover ratio is lower than the industry average and the days’ sales in inventory are high. A company wants to turn inventory quickly to reduce storage costs, and

Activity ratios identify how effectively management is turning over inventory. One activity ratio is the inventory

Anderton, P. (2001). Real Benchmarking: Retailers rate their businesses. Hardware & Home Centre Magazine, 25(6), 7-7, 8. Retrieved from http://search.proquest.com/docview/198817519?accountid=12085

In this ratio he explains about the three types of business inventory like raw materials, work in progress and finished goods. Formula to find the inventory turnover ratio and average age of inventory is: - inventory turnover = costs of goods sold/average inventory, Average age of inventory = 360 days/inventory turnover ratio.

In 2000, Amazon and Toys-R-Us entered into a symbiotic agreement that would benefit both corporate entities. Both companies had recently had unimpressive fiscal years due to differing issues. Toys “R” Us struggled with poor order fulfillment. Although they were equipped with enough merchandise, other issues kept them from being able to get orders to customers in a timely manner; especially during the busy holiday season. Conversely, Amazon was forced to write off $34 million because of a miscalculation in inventory and had orders that could not be honored (Ouchi, 2004). Following these debacles, both organizations felt that joining

Inventory turnover for Company A (3.08x) is higher than Company B (0.93x), that means inventories are sold and replaced faster than Company B. Company A has higher turnover because those institutions, especially hospitals “consume” health products faster and more. Lastly its show Company A has deep pipeline of its ethical pharmaceuticals.