Question

Select a public company and locate their most recent annual report. Review the financial statements and related footnotes and answer the following questions. ( Use Apple company 10 k- 2019)

1. How does your company value its inventories (i.e., which inventory costing method(s) do they use)?

2. If your company reports its inventories in multiple line items, what are they? (Look at both Balance Sheet and Footnotes for this information.)

3. What is your company’s Inventory Turnover and Average Days to Sell Inventory?

Answer 1

Apple company ( 10 k -2019 )

Apple Inc. uses the activity-based costing method to value its products. The method of activity based costing method that Apple Company uses is activity based management. Apple uses the FIFO (first in first out ) method to value its inventory . (more informations on the inventory are not available in the financial statements of apple 10 k -2019)

Inventory Turnover (Annual) Inventory Turnover:A ratio showing how many times a company's inventory is sold and replaced over a period. fromula : Cost of Goods Sold / Total Inventory.

Apple Inc. (AAPL) had Inventory Turnover of 39.40for the most recently reported fiscal year, ending 2019-09-30.

Average days to sell inventory : Apple's Total Inventories for the three months ended in Jun. 2020 was $3,656 Mil. Apple's Cost of Goods Sold for the three months ended in Jun. 2020 was $37,005 Mil. Hence, Apple's Days Inventory for the three months ended in Jun. 2020 was ,( 3656/37005 *92 days) 9.02. days .