Real-World Case Inventory management issues at the Penske Automotive Group
The following data were extracted from the 2008 financial statements of Penske Automotive Group, Inc. This company operates automobile dealerships, mostly in the United States and the United Kingdom. The company had 315 dealerships as of the end of 2008. Due to the general recession, automobile sales worldwide were down in 2008 from 2007, and the data for Penske reflects this downturn. By comparison, from 2006 to 2007 Penske’s revenues and net income increased by 15% and 2.4%. respectively.
| 2008 | 2007 |
Revenue from car sales | $8,794,738 | $10,157,216 |
Cost of sales—cars | 8,093,615 | 9,315,115 |
Gross profit—car sales | 701,123 | 842,101 |
Operating income before taxes | (502,512) | 197,080 |
Net income (loss) | (411,901) | 127,739 |
Ending inventory | 1,593,267 | 1,688,286 |
Required
a. Compute Penske’s gross margin percentage for 2008 and 2007.
b. Compute Penske’s average days to sell inventory for 2008 and 2007.
c. How much higher or lower would Penske’s earnings before taxes have been in 2008 if its gross margin percentage had been the same as it was in 2007? Show all supporting computations.
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.