Chapter 6, Problem 3BTN

Requirement 1:

To determine

To find:

Products manufactured by Apple.

To determine

Concept Introduction:

Gross Margin Ratio:

Gross margin ratio is the amount of gross margin expressed in percentage compared with the net sales of the business.

Inventory Turnover Ratio:

The financial ratio which shows the level of efficiency of a company in managing their inventory is termed as inventory turnover ratio. It is computed by dividing the cost of goods sold by the average inventory held by the company.

Days' Sales in Inventory:

The ratio which measures the amount of time taken by a company to sell its inventory. Days' sales in inventory are computed by dividing the number of days in a year by the inventory turnover ratio of the business.

Requirement 2:

To find the method:

What is the inventory method use by Apple?

To determine

Concept Introduction:

Gross Margin Ratio:

Gross margin ratio is the amount of gross margin expressed in percentage compared with the net sales of the business.

Inventory Turnover Ratio:

The financial ratio which shows the level of efficiency of a company in managing their inventory is termed as inventory turnover ratio. It is computed by dividing the cost of goods sold by the average inventory held by the company.

Days' Sales in Inventory:

The ratio which measures the amount of time taken by a company to sell its inventory. Days' sales in inventory are computed by dividing the number of days in a year by the inventory turnover ratio of the business.

Requirement 3:

To Compute:

Compute its gross margin and gross margin ratio for the fiscal year 2017. Comment on your computation

To determine

Concept Introduction:

Gross Margin Ratio:

Gross margin ratio is the amount of gross margin expressed in percentage compared with the net sales of the business.

Inventory Turnover Ratio:

The financial ratio which shows the level of efficiency of a company in managing their inventory is termed as inventory turnover ratio. It is computed by dividing the cost of goods sold by the average inventory held by the company.

Days' Sales in Inventory:

The ratio which measures the amount of time taken by a company to sell its inventory. Days' sales in inventory are computed by dividing the number of days in a year by the inventory turnover ratio of the business.

Requirement 4:

To compute:

Compute the inventory turnover and days' sales in inventory for the year ended September 30, 2017. Comment on your computations