Chapter 6, Problem 6.3ADM

Monster Beverage and Brown-Forman: Inventory turnover “7 and number of days' sales in inventory

Monster Beverage Corporation develops, markets, and sells energy and other alternative beverage brands. Brown-Forman Corporation manufactures and sells a wide variety of spirit and wine beverages, such as Jack Daniel’s®. The cost of goods sold and inventory were obtained from a recent annual report for both companies as follows (in millions):

	Monster Beverage	Brown-Forman
Cost of goods sold	$1,125	$928
Inventories:
Beginning of year	222	882
End ofyear	175	827

A. Determine the inventory turnover for both companies. (Round all calculations to one decimal place.)

B. Determine the number of days’ sales in inventory for both companies. (Use 365 days and round all calculations to one decimal place.)

C. Interpret the difference in inventory efficiency based on the companies’ respective product types.