Acc225 Fundamental Accounting Principles: BTN6-2 Comparative Analysis

Acc225 Fundamental Accounting Principles
BTN6-2 Comparative Analysis
Comparative figures for Best Buy, Circuity City, and RadioShack follow.
Best Buy Circuit City RadioShack
($ millions) Current Year One Year Prior Two Years Prior Current Year One Year Prior Two Years Prior Current Year One Year Prior Two Years Prior
Inventory 4,028 3,338 2,851 1,637 1,698 1,455 752 965 1,004
Cost of sales 27,165 23,122 20,938 9,501 8,704 7,861 2,544 2,706 2,407

Required:
1. Compute inventory turnover for each company for the most recent two years shown.
2. Compute days' sales in inventory for each company for the three years shown.
3. Comment on and interpret your findings from parts 1 and 2. Assume an industry average for inventory turnover of 6.3.
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