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 number of days’ sales in inventory. Round to one decimal place.b. Interpret the inventory ratios in the context of both companies’ operating strategies.
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 goods 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 to one decimal place.
b. Interpret the inventory ratios in the context of both companies’ operating strategies.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
