Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Chapter 4, Problem 17PC
a.
To determine
Compute the inventory turnover ratio for three years.
b.
To determine
Explain the reason for the differences in the inventory turnover ratio between the two firms.
c.
To determine
Explain the reason for the changes in the inventory turnover ratio during these three periods
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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
$56,940
$120,357
Cost of merchandise sold
44,754
92,385
Inventory, beginning of period
1,382
6,317
Inventory, end of period
1,404
7,490
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
fill in the blank 1
fill in the blank 2
2. Number of days' sales in inventory…
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
$56,940
$120,357
Cost of merchandise sold
44,754
92,385
Inventory, beginning of period
1,382
6,317
Inventory, end of period
1,404
7,490
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
fill in the blank 1
fill in the blank 2
2. Number of days' sales in inventory…
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 ElppaSales $56,940 $120,357Cost of goods sold 44,754 92,385Inventory, beginning of period 1,382 6,317Inventory, end of period 1,404 7,490a. Determine for both companies (1) the inventory turnover and (2) the…
Chapter 4 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
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