Question is being arranged. It has the following steps: Introduction of companies, Results for Inventory Turnover ratios, Improvement opportunity (here you will discuss how the company with lower ratio can improve), and the annual savings. Please see the below exact information given by prof. Thank you

Write an executive summary (two page, double spaced, 12 pt Georgia or Tahoma font) detailing the respective inventory turnover ratios for the given period, giving the equivalent number of days of inventory for each company, and the potential financial impact if the under-performing company could match the inventory turnover ratio of the higher-performing company. Assume a 25% carrying cost ratio. Be careful to use the correct units for the financial impact. (Financial numbers in Income Statements and Balance Sheets are often in $millions.)

See the attached template for the summary below.

Subject: AutoZone Advance Auto Inventory Turnover Analysis

From: yourname

Introduction: Brief introduction of the two companies. One paragraph.

Results: Results of the inventory turnover analysis. Inventory turnover ratio for each and days of inventory for each. One paragraph. Comment on the results. If the ratios you calculate are not close then you probably have chosen two companies that are fundamentally different and should not be compared. Why are they different?

Improvement opportunity: What is the potential financial impact if _________ (lower performing company) could achieve the same turnover ratio as __________ (higher performing company). One paragraph.

In order to evaluate the improvement opportunity you must calculate the following: The inventory level the underperforming company will have to achieve to match the turnover ratio of the better performing company. This is just New Inventory Level = COGS / Higher Turnover Level.

The savings achieved on a first year basis. This is the reduction in inventory carried = Old inventory level New Inventory Level.

The annual savings due to reduced inventory carrying costs. This is the reduction in inventory (see 2) X inventory carrying cost ratio expressed as a decimal (0.25 in our example).

Express 2 and 3 in terms of actual savings in $. Often the financial statements are in $ millions.