Inventory Turnover
A recent annual report of Kraft Foods, Inc., reveals the following mformation (dollar amounts are, stated in millions):
Cost of goods sold | $24,651 |
Inventory (beginning of year) | 3,506 |
Inventory (end of year) | 4,096 |
Average time required tocollect accounts receivable | 45 days |
a. Compute Kraft’s inventory turnover for the year (round to nearest tenth).
b. Compute the number of days required by Kraft to sell its average inventory (round to the nearest day).
c. What is the length of Kraft’s operating cycle?
d. What comparative information would you want to be able to evaluate Kraft’s operating cycle figure?
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