Chapter 14 Financial Statement Analysis 665a. Determine (1) the accounts receivable turnover and (2) the number of days’ sales in
receivables for both companies. Round to two decimal places.
b. Compare the two companies with regard to their accounts receivable efficiency.The following data were extracted from the income statement of Mountain Sports Inc.:2007 2006
Sales $656,000 $774,000
Beginning inventories 42,000 44,000
Cost of goods sold 328,000 430,000
Ending inventories 40,000 42,000a. Determine for each year (1) the inventory turnover and (2) the number of days’ sales in
inventory. Round to nearest dollar and to two decimal places.
b. What conclusions can be drawn from these data concerning the inventories?Dell Inc.andHewlett-Packard Corporation (HP)compete with each other in the personal com-
puter market. Dell’s strategy is to assemble computers to customer orders, rather than for in-
ventory. For example, Dell will build and deliver a computer within four days of a customer
entering an order on a Web page. Hewlett-Packard, in contrast, builds some computers prior to
receiving an order, then sells from this inventory once an order is received. Below is selected
financial information for both companies from a recent year’s financial statements (in millions).Dell Hewlett-Packard
Inc. Corporation
Sales $35,404 $45,955
Cost of goods sold 29,055 34,573
Inventory, beginning of period 278 5,204
Inventory, end of period 306 5,797a. Determine for both companies (1) the inventory turnover and (2) the number of days’
sales in inventory. Round to one decimal place.
b. Interpret the inventory ratios by considering Dell’s and Hewlett-Packard’s operating
emphases.The Walt Disney Co.reported segment information for a recent year as shown below.Exercise 14-14
Inventory analysis
Goal 3
a. Inventory turnover, 2007,
8.0
Exercise 14-15
Inventory analysis
Goal 3
a. (1) Dell inventory
turnover, 99.5
Exercise 14-16
Fixed asset analysis
Goal 3
a. Media Networks, 0.45
(in millions)
Media Parks and Studio Consumer
Networks Resorts Entertainment Products
Sales $11,778 $ 7,750 $8,713 $2,511
Identifiable fixed assets, ending balance 26,193 15,221 6,954 1,037
Identifiable fixed assets, beginning balance 25,882 11,067 7,832 966A brief description of each segment is as follows:Media Networks:The ABC television and radio network, Disney channel, ESPN, A&E, E!,
and Disney.com.
Parks and Resorts:Disney World, Disneyland, Disney Cruise Line, and other resort
properties.
Studio Entertainment:Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures,
Miramax, and Disney theatrical productions.
Consumer Products:Character merchandising and licensing, Disney stores, books, and
magazines.