McDonald's) The following figures are taken from the 2003 financial statements of McDonald's and Wendy's. ! Figures are in million dollars.
McDonald's Wendy's
Inventory $ 1 29.4 $ 54.4
Revenue 1 7, 1 40.5 3,1 48.9
Cost of goods sold 1 1 ,94 3 . 7 1 , 634.6
Gross profit 5 , 1 96.8 1 ,5 1 4.4
a. I n 2003, what were McDonald’s inventories turn? What were Wendy' s inventory turns?
b. Suppose it costs both McDonald’s and Wendy’s $3 (COGS) per their value meal offerings, each sold at the same price of $4. ASSW11e that the cost of inventory for both companies is 30 percent a year. Approximately how much does McDonald's save in inventory cost per value meal compared to that of Wendy's? You may assume the inventory turns are independent of the price.