Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Target Corporation (TGT) is one of the largest value-priced general merchandisers operating in the United States. Target sells through nearly 1,800 brick-and-morta stores and through the Internet. Amazon and Target compete for customers across a wide variety of products, including media, general merchandise, apparel, and consumer electronics. Cost of goods sold and inventory information from a recent annual report are provided for both companies as follows (in millions): Cost of goods sold Inventories: Amazon Target $139,156 $53,299 Beginning of year 16,047 8,597 End of year 17,147 9,497 a. Compute the inventory turnover for both companies. Round your answers to one decimal place. Inventory Turnover Amazon.com Target b. Compute the days' sales in inventory for both companies. Assume a 365-day year. If required, round all computations to one decimal place and use in subsequent calculations. Round final answers to one decimal place. Days' Sales in Inventory days days Amazon.com Target c. Which company has the better inventory efficiency? d. What might explain the difference in inventory efficiency between the two companies? 1. The sales team of Amazon is more efficient than the sales team of Target Corporation. 2. Target's merchandising strategy requires a more significant investment in inventory than Amazon's. 3. The profit margin of Amazon is much higher than that of Target Corporation. 4. Amazon is a much larger company than Target and has the resources to handle its funds in an efficient manner.
Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Target Corporation (TGT) is one of the largest value-priced general merchandisers operating in the United States. Target sells through nearly 1,800 brick-and-morta stores and through the Internet. Amazon and Target compete for customers across a wide variety of products, including media, general merchandise, apparel, and consumer electronics. Cost of goods sold and inventory information from a recent annual report are provided for both companies as follows (in millions): Cost of goods sold Inventories: Amazon Target $139,156 $53,299 Beginning of year 16,047 8,597 End of year 17,147 9,497 a. Compute the inventory turnover for both companies. Round your answers to one decimal place. Inventory Turnover Amazon.com Target b. Compute the days' sales in inventory for both companies. Assume a 365-day year. If required, round all computations to one decimal place and use in subsequent calculations. Round final answers to one decimal place. Days' Sales in Inventory days days Amazon.com Target c. Which company has the better inventory efficiency? d. What might explain the difference in inventory efficiency between the two companies? 1. The sales team of Amazon is more efficient than the sales team of Target Corporation. 2. Target's merchandising strategy requires a more significant investment in inventory than Amazon's. 3. The profit margin of Amazon is much higher than that of Target Corporation. 4. Amazon is a much larger company than Target and has the resources to handle its funds in an efficient manner.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Analyze and compare Amazon.com to Target
Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Target Corporation (TGT) is one of the largest value-priced general merchandisers operating in the United States. Target sells through nearly 1,800 brick-and-mortar
stores and through the Internet. Amazon and Target compete for customers across a wide variety of products, including media, general merchandise, apparel, and consumer electronics. Cost of goods sold and inventory information from a recent
annual report are provided for both companies as follows (in millions):
Cost of goods sold
Inventories:
Beginning of year
16,047 8,597
End of year
17,147 9,497
a. Compute the inventory turnover for both companies. Round your answers to one decimal place.
Inventory Turnover
Amazon.com
Amazon Target
$139,156 $53,299
Target
b. Compute the days' sales in inventory for both companies. Assume a 365-day year. If required, round all computations to one decimal place and use in subsequent calculations. Round final answers to one decimal place.
Days' Sales in Inventory
days
days
Amazon.com
Target
c. Which company has the better inventory efficiency?
d. What might explain the difference in inventory efficiency between the two companies?
1. The sales team of Amazon is more efficient than the sales team of Target Corporation.
2. Target's merchandising strategy requires a more significant investment in inventory than Amazon's.
3. The profit margin of Amazon is much higher than that of Target Corporation.
4. Amazon is a much larger company than Target and has the resources to handle its funds in an efficient manner.
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