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$)$:

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

Inventory turnover

Days' sales in inventory

days

days

b$.$ QT has a much

inventory turnover ratio than does Elppa. Likewise, QT has a much

days' sales in inventory. These significant differences are a

result of QT$\text{'}$s make$-$to$-$order strategy.