Calculating the inventory turnover


Response to the following problem:

The following data were taken from recent annual reports of Dell Inc., a vendor of personal computers and related technology products, and Boeing Co., a manufacturer of jet aircraft and aerospace products:

                                              Dell Inc.                                                Boeing Co.

                                             (in millions)                                         (in millions)

Cost of goods sold                   $40,190                                                $44,675

Inventory, end of year                 459                                                       4,247

Inventory, beginning of the year    27                                                        5,338

a. Determine the inventory turnover for Dell and Boeing. Round to one decimal place.

b. Would you expect Boeing's inventory turnover to be higher or lower than Dell's? Why?

 

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Financial Accounting: Calculating the inventory turnover
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