MAD $6-1$ Analyze and compare Amazon.com to Target

Obj. $7$

Amazon.com, Inc. $($AMZN$)$ is one of the largest Internet retailers in the world. Target Corporation $($TGT$)$ is one of the largest value$-$priced general merchandisers operating in the United States. Target sells through nearly $1,800$ brick$-$and$-$mortar stores and through the Internet. Amazon and Target compete for customers across a wide variety of products, including media, general merchandise, apparel, and consumer electronics. Cost of goods sold and inventory information from a recent annual report are provided for both companies as follows $($in millions$)$:

Cost of goods sold

Amazon

$$139,156$

Target

$$53,299$

Inventories:

Beginning of year

$16,047$

$8,597$

End of year

$17,147$

$9,497$

a$.$ Compute the inventory turnover for both companies. Round all calculations to one decimal place.

b$.$ Compute the days sales in inventory for both companies. Use $365$ days and round all calculations to one decimal place.

C$.$

d$.$

Which company has the better inventory efficiency?

What might explain the difference in inventory efficiency between the two companies?

$1.$ For items a$.$ and b$.,$ show your calculations.

$2.$ Assume that the Amazon ratio is $10\mathrm{.}0($it$\text{'}$s not$).$ Your friend is thinking about investing in Amazon.

Your friend ask you to explain what the $10\mathrm{.}0$ inventory turnover ratio means to an investor.