Corporate Financial Accounting 14th Edition by Carl Warren,James Reeve,Jonathan Duchac

Exercise 30

Hewlett-Packard and Apple: Inventory turnover and number of days' sales in inventory
Hewlett-Packard Company (HP) and Apple Inc. are both developers and marketers of computer equipment and peripherals. However, the two companies follow different manufacturing strategies. HP maintains a significant portion of its own manufacturing capabilities, while Apple outsources manufacturing to other companies. The following financial statement information is provided for both companies for a recent year (in millions):

A. Determine the inventory turnover for each company. (Round all calculations to one decimal place.)
B. Determine the number of days' sales in inventory for each company. (Use 365 days and round all calculations to one decimal place.)
C. Interpret the difference between the ratios for the two companies.