BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
42 views

Inventory turnover

The following data (in thousands) were taken from recent annual reports of Apple Inc. , a manufacturer of personal computers and related products, and American Greetings Corporation, a manufacturer and distributor of greeting cards and related products :

Chapter 7, Problem 7.20EX, Inventory turnover The following data (in thousands) were taken from recent annual reports of Apple

a. Determine the inventory turnover for Apple and American Greetings. Round to one decimal place.

b. Would you expect American Greetings’ inventory turnover to be higher or lower than Apple’s? Why?

(a)

To determine

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. The formula to calculate the days’ sales in inventory ratio is as follows:

Days' sales in inventory=Days in accounting periodInventory turnover

the inventory turnover for Company A and Company AG.

Explanation

The inventory turnover ratio is calculated by dividing cost of goods sold by average inventory during the period. The average inventory is calculating by dividing beginning inventory and ending inventory by 2...

(b)

To determine

To explain: Whether the inventory turnover of Company AG should be higher or lower than the Company A.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

The values of outstanding bonds change whenever the going rate of interest changes. In general, short-term inte...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What are the major components of a marketing strategy.

Foundations of Business (MindTap Course List)

Differentiate between ROE and ROIC.

Fundamentals of Financial Management (MindTap Course List)

Explain how a change in sales mix can change a companys break-even point.

Cornerstones of Cost Management (Cornerstones Series)