Inventory analysis 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 $56,940 $120,357 44,754 92,385 1,382 6,317 1,404 7,490 a. Determine for both companies (1) the inventory turnover and (2) the days' sales in inventory. Round your calculations and answers to one decimal place. Assume 365 days a year. QT Elppa Sales Cost of goods sold Inventory, beginning of period Inventory, end of period 1. Inventory turnover 2. Days' sales in inventory b. QT has a much higher smaller strategy. days days ✓ inventory turnover ratio than does Elppa. Likewise, QT has a much ✔ days' sales in inventory. These significant differences are a result of QT's make-to-order

Inventory analysis 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 $56,940 $120,357 44,754 92,385 1,382 6,317 1,404 7,490 a. Determine for both companies (1) the inventory turnover and (2) the days' sales in inventory. Round your calculations and answers to one decimal place. Assume 365 days a year. QT Elppa Sales Cost of goods sold Inventory, beginning of period Inventory, end of period 1. Inventory turnover 2. Days' sales in inventory b. QT has a much higher smaller strategy. days days ✓ inventory turnover ratio than does Elppa. Likewise, QT has a much ✔ days' sales in inventory. These significant differences are a result of QT's make-to-order

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 12E

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Inventory Analysis 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 $52,560 $65,800 Cost of goods sold 43,800 62,050 Inventory, beginning of period 1,856 7,339 Inventory, end of period 2,056 8,539 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 2. Number of days' sales in inventory days days
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 $35,040 $46,400 Cost of goods sold 29,200 43,800 Inventory, beginning of period 932 4,028 Inventory, end of period 1,132 4,828 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. (refer to image) b. QT has a ______ (higher/lower) inventory turnover ratio than does Elppa Company. Likewise, QT has a _____ (larger/smaller) number…
PC Mall, Inc., is a direct marketer of computer hardware, software, peripherals, and electronics.In a recent annual report, the company reported that its revenue is “recognized upon receipt of theproduct by the customer.”Required:1. Indicate whether PC Mall’s sales terms are FOB shipping point or FOB destination.2. Assume PC Mall sold inventory on account to eCOST.com on December 28 that was to bedelivered January 3. The inventory cost PC Mall $25,000 and the selling price was $30,000.What amounts, if any, related to this transaction would be reported on PC Mall’s balance sheetand income statement in December? In January?3. Assume PC Mall purchased electronics on December 29 that were shipped that day andreceived on January 2. For these goods to be included in PC Mall’s inventory on December 31,would the terms have been FOB destination or FOB shipping point?
Enumerate the data and their type that you can identify or infer from the following application areas. 1. Inventory System of XYZ Wholesale Corporation. The company keeps track of pertinent information regarding all the items in stock through its computerized inventory system. This system enables the company to determine in a few keystrokes and at any time the quantity or stock level or every item. It allows XYZ to set the reorder level and reorder quantity each time such that when the stock level falls below the critical level, the item is automatically reordered from its supplier. The preparation of the purchase order is also automated because the supplier and its address, the reorder quantity, the unit cost, and the description of the item are all available on the computer. When an item in stock is replenished (supplied) or diminished(sold), its inventory and its potential profit margin because the unit selling price aside from the unit acquisition cost of each item is also stored…
Target Corp. sells merchandise primarily through its retail stores. On the other hand, Amazon.com uses its e-commerce services, features, and technologies to sell its products through the Internet. Recent balance sheet inventory disclosures for Target and Amazon.com (in millons) are as follows: Determine the inventory turnover for Target and Amazon.com. Round to two decimal places. Determine the days’ sales in inventory for Target and Amazon.com. Use 365 days and round to one decimal place. Interpret your results.
Situation: To pump up sales of all brands, Chapman Inc. is moving aggressively to ship extra cases of inventory into distributors’ warehouses and record them as sales, a practice generally known as “trade loading.” Chapman’s president has asked you whether these shipments may be recognized as revenue. Directions: Research the related generally accepted accounting principles and prepare a short memo to the president. Cite your references and applicable paragraph numbers.
S Required information [The following information applies to the questions displayed below.] You have been given responsibility for overseeing a bank's small business loans division. The bank has included loan covenants requiring a minimum current ratio of 1.40 in all small business loans. When you ask which inventory costing method the covenant assumes, the previous loans manager gives you a blank look. To explain to him that a company's inventory costing method is important, you present the following balance sheet information. Current assets other than inventory Inventory Other (noncurrent) assets Total assets Current liabilities Other (noncurrent) liabilities Stockholders' equity Total liabilities and stockholders' equity $ 27 (a) 141 $ (b) $ 70 78 (d) $ (c) You ask the former loans manager to find amounts for (a), (b), (c), and (d) assuming the company began the year with 5 units of inventory at a unit cost of $14, then purchased 8 units at a cost of $15 each, and finally purchased…
Required information [The following information applies to the questions displayed below.] You have been given responsibility for overseeing a bank's small business loans division. The bank has included loan covenants requiring a minimum current ratio of 1.30 in all small business loans. When you ask which inventory costing method the covenant assumes, the previous loans manager gives you a blank look. To explain to him that a company's inventory costing method is important, you present the following balance sheet information. Current assets other than inventory Inventory Other (noncurrent) assets Total assets Current liabilities Other (noncurrent) liabilities Stockholders' equity Total liabilities and stockholders' equity $ 30 (a) 147 $ (b) $ 76 84 (d) $ (c) You ask the former loans manager to find amounts for (a), (b), (c), and (d) assuming the company began the year with 6 units of inventory at a unit cost of $10, then purchased 9 units at a cost of $11 each, and finally purchased 7…
Required information [The following information applies to the questions displayed below.] You have been given responsibility for overseeing a bank's small business loans division. The bank has included loan covenants requiring a minimum current ratio of 1.40 in all small business loans. When you ask which inventory costing method the covenant assumes, the previous loans manager gives you a blank look. To explain to him that a company's inventory costing method is important, you present the following balance sheet information. Current assets other than inventory Inventory Other (noncurrent) assets Total assets Current liabilities Other (noncurrent) liabilities Stockholders' equity Total liabilities and stockholders' equity 0³3|2|2R9|2| You ask the former loans manager to find amounts for (a), (b), (c), and (d) assuming the company began the year with 5 units of inventory at a unit cost of $14, then purchased 8 units at a cost of $15 each, and finally purchased 6 units at a cost of $19…
Required information [The following information applies to the questions displayed below.] You have been given responsibility for overseeing a bank's small business loans division. The bank has included loan covenants requiring a minimum current ratio of 1.40 in all small business loans. When you ask which inventory costing method the covenant assumes, the previous loans manager gives you a blank look. To explain to him that a company's inventory costing method is important, you present the following balance sheet information. Current assets other than inventory Inventory Other (noncurrent) assets Total assets Current liabilities Other (noncurrent) liabilities Stockholders' equity Total liabilities and stockholders' equity $ 27 (a) 141 $ (b) $ 70 78 (d) $ (c) You ask the former loans manager to find amounts for (a), (b), (c), and (d) assuming the company began the year with 5 units of inventory at a unit cost of $14, then purchased 8 units at a cost of $15 each, and finally purchased 6…
Required information [The following information applies to the questions displayed below.] You have been given responsibility for overseeing a bank's small business loans division. The bank has included loan covenants requiring a minimum current ratio of 1.40 in all small business loans. When you ask which inventory costing method the covenant assumes, the previous loans manager gives you a blank look. To explain to him that a company's Inventory costing method is important, you present the following balance sheet information. Current assets other than inventory Inventory Other (noncurrent) assets Total assets Current liabilities Other (noncurrent) liabilities Stockholders' equity Total liabilities and stockholders' equity $ 27 (a) 141 $ (b) Inventory Total Assets Total Liabilities and Stockholders' Equity Stockholders' Equity $70 78 (d) (c) You ask the former loans manager to find amounts for (a), (b), (c), and (d) assuming the company began the year with 5 units of inventory at a…
Required information [The following information applies to the questions displayed below.] You have been given responsibility for overseeing a bank's small business loans division. The bank has included loan covenants requiring a minimum current ratio of 1.40 in all small business loans. When you ask which inventory costing method the covenant assumes, the previous loans manager gives you a blank look. To explain to him that a company's Inventory costing method is important, you present the following balance sheet Information. Current assets other than inventory Inventory Other (noncurrent) assets. Total assets Current liabilities Other (noncurrent) liabilities Stockholders' equity Total liabilities and stockholders' equity Answer is not complete. Inventory Total Assets Total Liabilities and Stockholders' Equity Stockholders' Equity Amount $ $ You ask the former loans manager to find amounts for (a), (b), (c), and (d) assuming the company began the year with 5 units of inventory at a…