Inventory analysis QT, Inc. and Elppa Computers, Inc. compete with each other in the personal computer...

Transcribed Image Text:

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 $56,940 $120,357 Cost of goods sold 44,754 92,385 Inventory, beginning of period 1,382 6,317 Inventory, end of period 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. 1. Inventory turnover 2. Days' sales in inventory QT 32.1 11.4 days Elppa 13.4 27.0 X days b. QT has a much higher smaller 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 strategy. 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 $56,940 $120,357 Cost of goods sold 44,754 92,385 Inventory, beginning of period 1,382 6,317 Inventory, end of period 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. 1. Inventory turnover 2. Days' sales in inventory QT 32.1 11.4 days Elppa 13.4 27.0 X days b. QT has a much higher smaller 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 strategy.