3M Company reports the following financial statement amounts in its 10-K report: a. Compute the receivables, inventory,
Question:
3M Company reports the following financial statement amounts in its 10-K report:
a. Compute the receivables, inventory, and PPE turnover ratios for both 2018 and 2017. (Receivables turnover and inventory turnover are discussed in Chapters 6 and 7, respectively.)
b. What changes are evident in the turnover rates of 3M for these years? Discuss ways in which a company such as 3M can improve its turnover within each of these three areas.
($ millions) Sales Cost of Sales Receivables Inventories PPE, net 2018... $32,765 $16,682 $5.020 $4,366 $8,738 ...... 2017. 31,657 16,055 4,911 4,034 8,866 2016. 30,109 15,118 4,392 3,385 8,516
Step by Step Answer:
a b 3Ms Receivable and Inventory turnover ratios have declined from 2017 to 2018 while its PPET impr...View the full answer
Financial Accounting
ISBN: 9781618533111
6th Edition
Authors: Michelle L. Hanlon, Robert P. Magee, Glenn M. Pfeiffer, Thomas R. Dyckman
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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