Bundle: Financial & Managerial Accounting, Loose-leaf Version, 14th + Working Papers For Warren/reeve/duchac's Corporate Financial Accounting, 14th + ... Financial & Managerial Accounting,
14th Edition
ISBN: 9781337802000
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 14, Problem 14.12EX
A(1)
To determine
Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.
To compute: Inventory turnover ratio and number of days’ sales in inventory
Given info: Cost of goods sold and average inventory
A(2)
To determine
To compute: Number of days sales in inventory.
Given info: Average inventory and average daily cost of goods sold.
b)
To determine
To conclude: Position of inventory.
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QT, Inc. and Elppa Computers, Inc. compete with each other in the personal computer market. QT assembles computers to customer orders, building and delivering a computer within four days of a customer entering an order online. Elppa, on the other hand, builds computers for inventory prior to receiving an order. These computers are sold from inventory once an order is received. Selected financial information for both companies from recent financial statements follows (in millions):
QT
Elppa
Sales
$35,040
$46,400
Cost of goods sold
29,200
43,800
Inventory, beginning of period
932
4,028
Inventory, end of period
1,132
4,828
a. Determine for both companies (1) the inventory turnover and (2) the number of days' sales in inventory. Round your calculations and answers to one decimal place. Assume 365 days a year.
(refer to image)
b. QT has a ______ (higher/lower) inventory turnover ratio than does Elppa Company. Likewise, QT has a _____ (larger/smaller) number…
Inventory Analysis
QT, Inc. and Elppa Computers, Inc. compete with each other in the personal computer market. QT assembles computers to customer orders, building and delivering a computer within four days of a customer entering an order online. Elppa, on the
other hand, builds computers for inventory prior to receiving an order. These computers are sold from inventory once an order is received. Selected financial information for both companies from recent financial statements follows (in millions):
QT
Elppa
Sales
$52,560
$65,800
Cost of goods sold
43,800
62,050
Inventory, beginning of period
1,856
7,339
Inventory, end of period
2,056
8,539
a. Determine for both companies (1) the inventory turnover and (2) the number of days' sales in inventory. Round your calculations and answers to one decimal place. Assume 365 days a year.
QT
Elppa
1. Inventory turnover
2. Number of days' sales in inventory
days
days
You have just been appointed as financial manager of Slow-Moving-Stock Limited. One of your
main focus areas is to improve the inventory management system that the company currently
has in place. You have extracted the following records from the Inventory Management
Software.
ITEM X4355
January
February
March
April
May
June
July
August
September
October
November
December
Normal days for delivery
Maximum days for delivery
Cost of placing an order
Carrying cost of a unit per year
Total
Sales (u)
1500
1300
1200
1100
1100
1100
1500
1600
1700
1800
2500
1900
18300
a) Determine and comment on the inventory days ratio. (
b) Determine the appropriate reorder level for Item X4355.
c) Determine the Economic order quantity for Item X4355. (
5
8
R850
R250
Trading
days
20
18
20
19
20
21
22
20
20
21
22
17
240
You also found that total purchases for all items for the year was R55 000 000 with the end of
year inventory value being R26 000 000.
Chapter 14 Solutions
Bundle: Financial & Managerial Accounting, Loose-leaf Version, 14th + Working Papers For Warren/reeve/duchac's Corporate Financial Accounting, 14th + ... Financial & Managerial Accounting,
Ch. 14 - Prob. 1DQCh. 14 - What is the advantage of using comparative...Ch. 14 - A companys current year net income (after income...Ch. 14 - Prob. 4DQCh. 14 - Prob. 5DQCh. 14 - Prob. 6DQCh. 14 - Prob. 7DQCh. 14 - Prob. 8DQCh. 14 - Prob. 9DQCh. 14 - Prob. 10DQ
Ch. 14 - Prob. 14.1BECh. 14 - Vertical analysis Income statement information for...Ch. 14 - Prob. 14.3BECh. 14 - Accounts receivable analysis A company reports the...Ch. 14 - Inventory analysis A company reports the...Ch. 14 - Long-term solvency analysis The following...Ch. 14 - Times interest earned A company reports the...Ch. 14 - Asset turnover A company reports the following:...Ch. 14 - Prob. 14.9BECh. 14 - Common stockholders' profitability analysis A...Ch. 14 - Earnings per share and price-earnings ratio A...Ch. 14 - Vertical analysis of income statement Revenue and...Ch. 14 - Vertical analysis of income statement The...Ch. 14 - Common-sized income statement Revenue and expense...Ch. 14 - Vertical analysis of balance sheet Balance shed...Ch. 14 - Horizontal analysis of the income statement Income...Ch. 14 - Current position analysis The following data were...Ch. 14 - Prob. 14.7EXCh. 14 - Prob. 14.8EXCh. 14 - Prob. 14.9EXCh. 14 - Prob. 14.10EXCh. 14 - Inventory analysis The following data were...Ch. 14 - Prob. 14.12EXCh. 14 - Ratio of liabilities to stockholders' equity and...Ch. 14 - Prob. 14.14EXCh. 14 - Prob. 14.15EXCh. 14 - Prob. 14.16EXCh. 14 - Profitability ratios The following selected data...Ch. 14 - Profitability ratios Ralph Lauren Corporation...Ch. 14 - Six measures of solvency or profitability The...Ch. 14 - Five measures of solvency or profitability The...Ch. 14 - Prob. 14.21EXCh. 14 - Prob. 14.22EXCh. 14 - Prob. 14.23EXCh. 14 - Prob. 14.24EXCh. 14 - Prob. 14.25EXCh. 14 - Comprehensive Income Anson Industries, Inc....Ch. 14 - Horizontal analysis of income statement For 20V2,...Ch. 14 - Prob. 14.2APRCh. 14 - Prob. 14.3APRCh. 14 - Measures of liquidity, solvency, and profitability...Ch. 14 - Prob. 14.5APRCh. 14 - Horizontal analysis of income statement For 20Y2,...Ch. 14 - Prob. 14.2BPRCh. 14 - Effect of transactions on current position...Ch. 14 - Measures of liquidity, solvency and profitability...Ch. 14 - Prob. 14.5BPRCh. 14 - Financial Statement Analysis The financial...Ch. 14 - Continuing Company AnalysisAmazon, Best Buy, and...Ch. 14 - Prob. 2ADMCh. 14 - Prob. 3ADMCh. 14 - Prob. 14.1TIFCh. 14 - Prob. 14.3TIF
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