Calculate the inventory turnover ratio for each firm

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Reference no: EM13902227

CALCULATING AND INTERPRETING INVENTORY TURNOVER RATIOS. Dell produces computers and related equipment on a made-to-order basis for consumers and businesses. Sun Microsystems designs and manufactures higher-end com- puters 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 prod- uct sales of computers. Selected data for each firm for 2007-2009 appear in Exhibit 4.23. (Dell's fiscal year-end is in January; Sun's fiscal year-end is in June. As of the writing of this text, an acquisition of Sun by Oracle is pending.)

Required:

a. Calculate the inventory turnover ratio for each firm for 2007-2009.

b. Suggest reasons for the differences in the inventory turnover ratios of these two firms.

c. Suggest reasons for the changes in the inventory turnover ratios during the three-year period.

Text Book: Financial Reporting, Financial Statement Analysis and Valuation: A Strategic Perspective By James Wahlen, Stephen Baginski, Mark Bradshaw.

Reference no: EM13902227

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