Dell produces computers and related equipment on a made-to-order basis for consumers and businesses. Sun Microsystems designs and manufactures higher-end computers that function as servers and for use in computer-aided design. Sun Microsystems sells primarily to businesses. It also provides services to business customers in addition to product sales of computers. Selected data for each firm for three recent years appear in Exhibit 4.24. (Dell's fiscal year-end is in January; Sun's fiscal year-end is in June. Subsequently, in 2010, Oracle acquired Sun.)

REQUIRED
a. Calculate the inventory turnover ratio for each firm for the three years.
b. Suggest reasons for the differences in the inventory turnover ratios of these two firms.
c. Suggest reasons for the trends in the inventory turnover ratios during the three-year period.

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Exhibit 4.24 Selected Data for Dell and Sun Microsystems (amounts in millions) (Problem 4.17) Year 3 Year 2 Year 1 Dell Cost of goods sold Average inventories Change in sales from previous year $49,375 $48,855 $47,433 1,024 920 618 +1.1% +3.0% +4.1% Sun Microsystems Cost of goods sold $ 5,948 $ 6,639 $ 6,778 Average inventories Change in sales from previous year 623 602 532 (10.4)% (2.1)% +3.7%