Question

Apple and Samsung compete in the global marketplace. Apple’s and Samsung’s financial statements are in Appendix A. Required:

1. Compute the ratio of inventory to total assets for Apple as of September 30, 2017, and for Samsung as of December 31, 2017. Express your answers as percentages, rounded to two decimal places. 2. Based on the answer to question 1, which company’s (Apple or Samsung) inventory policy more closely follows a JIT system?

Answer 1

1. Computation of the ratio of inventory to total assets for Apple as of September 30, 2017, and for Samsung as of December 31, 2017:

	APPLE As of Sept. 30, 2017		SAMSUNG As of Dec. 31 2017
Inventory.............................	$4,855*		₩24,983,355**
Total assets........................ Inventory/total assets..........	$375,319 1.29%		₩301,752,090 8.28%

*$ millions

**millions of Korean won

2. Based on the answer to question 1, which company’s (Apple or Samsung) inventory policy more closely follows a JIT system?

Apple has a lower ratio of inventory to total assets (1.29%) compared to Samsung (8.28%).

Based on this ratio Apple’s inventory policy more closely follows a JIT system.