A recent balance sheet of Wal-Mart reports sales of $285,222 million and cost of goods sold of $219.793 million for the year ended January 31. 2005. The comparable sales and cost of goods sold figures for the year ended one year earlier were $256,329 million and $.198,747 million, respectively. As you would expect, to be able to achieve this high level of sales, a great deal of inventory must be maintained so that customers will find what they want to buy when they shop in Wal-Mart stores. In fact, in the January 31, 2005, balance sheet, inventory is presented at $29,447 million and the comparable figure for a year earlier is $26,612 million.
a. Compute the inventory turnover rate for Wal-Mart for both 2004 and 2005.
b. Compute the average number of days required by Wal-Mart to sell its inventory for the same years.
c. In which year was the company more efficient in its management of inventory? Explain your answer.
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