Corporate Financial Accounting
14th Edition
ISBN: 9781305653535
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter 6, Problem 6.3ADM
Monster Beverage and Brown-Forman: Inventory turnover “7 and number of days' sales in inventory
Monster Beverage Corporation develops, markets, and sells energy and other alternative beverage brands. Brown-Forman Corporation manufactures and sells a wide variety of spirit and wine beverages, such as Jack Daniel’s®. The cost of goods sold and inventory were obtained from a recent annual report for both companies as follows (in millions):
| Monster Beverage | Brown-Forman | |
| Cost of goods sold | $1,125 | $928 |
| Inventories: | ||
| Beginning of year | 222 | 882 |
| End ofyear | 175 | 827 |
A. Determine the inventory turnover for both companies. (Round all calculations to one decimal place.)
B. Determine the number of days’ sales in inventory for both companies. (Use 365 days and round all calculations to one decimal place.)
C. Interpret the difference in inventory efficiency based on the companies’ respective product types.
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PepsiCo, Inc., manufacturer and distributor of drinks, Frito-Lay, and Quaker Foods, provides the fol-lowing in a recent annual report (shown here in $ billions). Determine PepsiCo’s turnover.
Net revenue $32.5Cost of goods sold $14.2Inventory:Raw material inventory $.74Work-in-process inventory $.11Finished goods inventory $.84Total average inventory investment $1.69
APPROACH c Use the inventory turnover computation in Equation (11-2) to measure inventoryperformance. Cost of goods sold is $14.2 billion. Total inventory is the sum of raw material at $.74 billion,
work-in-process at $.11 billion, and finished goods at $.84 billion, for total average inventory invest-ment of $1.69 billion.
The financial data for Crane's Fresh Fruits Incorporated and Cullumber's Supermarket Ltd. for the current year are as follows:
Crane's Fresh Fruits
Cullumber's Supermarket
(a)
Annual Cost
of Goods
Sold
$9,724,440
Inventory turnover
53,026,340
Inventory
Jan. 1
$64 100
4,512,200
Crane's Fresh Fruits
Inventory
Dec. 31
Calculate the inventory turnover for each company. (Round answers to 1 decimal place, e.g. 18.4.)
times
$756,100
1,128,900
Cullumber's Supermarket
times
Cost of goods sold for Califant Industries was $949,420 for the year. If the beginning inventory at cost was $609,700 and the ending inventory at cost was $416,200, find the inventory turnover at cost. (Round your answer to the nearest tenth.)
a. 1.9 times
b. 2.0 times
c. 2.4 times
d. 3.2 times
Chapter 6 Solutions
Corporate Financial Accounting
Ch. 6 - Prob. 1DQCh. 6 - Why is it important to periodically take a...Ch. 6 - Do the terms FIFO, LIFO, and weighted average...Ch. 6 - If inventory is being valued at cost and the price...Ch. 6 - Which of the three methods of inventory...Ch. 6 - If inventory is being valued at cost and the price...Ch. 6 - Using the following data, how should the inventory...Ch. 6 - The inventory at the end of the year was...Ch. 6 - Hutch Co. sold merchandise to Bibbins Company on...Ch. 6 - A manufacturer shipped merchandise to a retailer...
Ch. 6 - Cost flow methods The following three identical...Ch. 6 - Perpetual inventory using FIFO Beginning...Ch. 6 - Perpetual inventory using LIFO Beginning...Ch. 6 - Periodic inventory using FIFO, UFO, and weighted...Ch. 6 - Lower-of-cost-or-market method On the basis of the...Ch. 6 - Effect of inventory errors During the taking of...Ch. 6 - Control of inventories Triple Creek Hardware Store...Ch. 6 - Control of inventories Hardcase Luggage Shop is a...Ch. 6 - Perpetual inventory using FIFO Beginning...Ch. 6 - Perpetual inventory using LIFO Assume that the...Ch. 6 - Perpetual inventory using LIFO Beginning...Ch. 6 - Perpetual inventory using FIFO Assume that the...Ch. 6 - FIFO and UFO costs under perpetual inventory...Ch. 6 - Weighted average cost flow method under perpetual...Ch. 6 - Weighted average cost flow method under perpetual...Ch. 6 - Perpetual inventory using FIFO Assume that the...Ch. 6 - Perpetual inventory using LIFO Assume that the...Ch. 6 - Periodic inventory by three methods The units of...Ch. 6 - Periodic inventory by three methods; cost of goods...Ch. 6 - Comparing inventory methods Assume that a firm...Ch. 6 - Lower-of-cost-or-market inventory On the basis of...Ch. 6 - Inventory on the balance sheet Based on the data...Ch. 6 - Effect of errors n physical inventory Madison...Ch. 6 - Effect of errors in physical inventory Fonda...Ch. 6 - Prob. 6.19EXCh. 6 - Retail method A business using the retail method...Ch. 6 - Retail method A business using the retail method...Ch. 6 - Prob. 6.22EXCh. 6 - Retail method On the basis of the following data,...Ch. 6 - Prob. 6.24EXCh. 6 - Gross profit method Based on the following data,...Ch. 6 - Gross profit method Based on the following data,...Ch. 6 - FIFO perpetual inventory The beginning inventory...Ch. 6 - LIFO perpetual inventory The beginning inventory...Ch. 6 - Weighted average cost method with perpetual...Ch. 6 - Periodic inventory by three methods The beginning...Ch. 6 - Periodic inventory by three methods Dymac...Ch. 6 - Lower-of-cost-or-market inventory Data on the...Ch. 6 - Retail method; gross profit method Selected data...Ch. 6 - FIFO perpetual inventory The beginning inventory...Ch. 6 - LIFO perpetual inventory The beginning inventory...Ch. 6 - Weighted average cost method with perpetual...Ch. 6 - Periodic inventory by three methods The beginning...Ch. 6 - Periodic inventory by three methods Pappas...Ch. 6 - Lower-of-cost-or-market inventory Data on the...Ch. 6 - Retail method; gross profit method Selected data...Ch. 6 - Continuing Company AnalysisAmazon: Inventory...Ch. 6 - Costco, Walmart, Nordstrom: Inventory turnover and...Ch. 6 - Monster Beverage and Brown-Forman: Inventory...Ch. 6 - Prob. 6.4ADMCh. 6 - Ethics in Action Sizemo Elektroniks sells...Ch. 6 - Communication Golden Eagle Company began...
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