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AccountingFinancial Accounting15th Edition
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Target Corp. sells merchandise primarily through its retail stores. On the other hand, Amazon .com uses its e-commerce services, features, and technologies to sell its products through the Internet. Recent balance sheet inventory disclosures for Target and Amazon.com (in millons) are as follows: a. Determine the inventory turnover for Target and Amazon.com. Round to two decimal places. b. Determine the days’ sales in inventory for Target and Amazon.com. Use 365 days and round to one decimal place. c. Interpret your results.

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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Chapter
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Problem 1DQ
Problem 2DQ
Problem 3DQ
Problem 4DQ
Problem 5DQ
Problem 6DQ
Problem 7DQ
Problem 8DQ
Problem 9DQ
Problem 10DQ
Problem 1PEA
Problem 1PEB
Problem 2PEA
Problem 2PEB
Problem 3PEA
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Problem 4PEA
Problem 4PEB
Problem 5PEA
Problem 5PEB
Problem 6PEA
Problem 6PEB
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Problem 7PEB
Problem 8PEA
Problem 8PEB
Problem 1E
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Problem 4E
Problem 5E
Problem 6E
Problem 7E
Problem 8E
Problem 9E
Problem 10E
Problem 11E
Problem 12E
Problem 13E
Problem 14E
Problem 15E
Problem 16E
Problem 17E
Problem 18E
Problem 19E
Problem 20E
Problem 21E
Problem 22E
Problem 23E
Problem 24E
Problem 25E
Problem 26E
Problem 27E
Problem 28E
Problem 1PA
Problem 2PA
Problem 3PA
Problem 4PA
Problem 5PA
Problem 6PA
Problem 7PA
Problem 1PB
Problem 2PB
Problem 3PB
Problem 4PB
Problem 5PB
Problem 6PB
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Problem 1CP
Problem 2CP
Problem 4CP
Problem 5CP
Problem 6CP
Problem 7CP
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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 7, Problem 6CP
Textbook Problem
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Target Corp. sells merchandise primarily through its retail stores. On the other hand, Amazon .com uses its e-commerce services, features, and technologies to sell its products through the Internet. Recent balance sheet inventory disclosures for Target and Amazon.com (in millons) are as follows:

Chapter 7, Problem 6CP, Target Corp. sells merchandise primarily through its retail stores. On the other hand, Amazon .com

  1. a. Determine the inventory turnover for Target and Amazon.com. Round to two decimal places.
  2. b. Determine the days’ sales in inventory for Target and Amazon.com. Use 365 days and round to one decimal place.
  3. c. Interpret your results.

(a)

To determine

Determine the inventory turnover for Company T and Company A.

Explanation of Solution

Inventory turnover ratio: Inventory turnover ratio is used to determine the number of times inventory used or sold during the particular accounting period. The formula to calculate the inventory turnover ratio is as follows:

Inventory turnover=Cost of goods soldAverage inventory

Days’ sales in inventory: Days’ sales in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them

(b)

To determine

Determine the Days’ sales in inventory ratio Company T and Company A.

(c)

To determine

Interpret the above calculated ratios.

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