The following data were taken from recent annual reports of Dell Inc., a vendor of personal computers
Question:
a. Determine the inventory turnover for Dell and Boeing. Round to one decimal place.
b. Would you expect Boeings inventory turnover to be higher or lower than Dells?Why?
Dell Inc.Boeing Co. (in millions) in millions) Cost of goods sold Inventory, end of year Inventory, beginning of the year $40,190 459 327 $44,675 4,247 5,338
Step by Step Answer:
a Dell 1023 40190 459 327 2 Boeing 93 44675 4247 5338 2 b Lower Much of Boeings ...View the full answer
Financial Accounting An Integrated Statements Approach
ISBN: 978-0324312119
2nd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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