How much does Mcdonald save in the inventory cost

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Reference no: EM132652013

Problem - The following figures are taken from the 2004 financial statements of Mcdonald's and Wendy's. Figures are in million dollars.

 

Mcdonald's

Wendy's

Inventory

130.6

57.7

Revenue

17,140.5

3,148.9

Cost of goods sold (COGS)

11,111.6

1,234.5

Gross profit

5,196.8

1,514.4

i. In 2004, what were Mcdonald's inventory turns? What were Wendy's inventory turns?

ii. Suppose it costs both Mcdonald's and Wendy's $4 (COGS) for each value meal offerings, each sold at the same price of $6. Assume that the cost of inventory for both companies is 34% a year. Approximately how much does Mcdonald's save in the inventory cost per value meal compared to that of Wendy's? You may assume the inventory turns are independent of price.

Reference no: EM132652013

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