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Accounting: Ratio analysis for Apple and HP.

Problem 5-6 Inventory Turnover for Apple Computer and Hewlett-Packard

The following information was summarized from the 2006 annual report of apple computer, inc.:

Cost of sales for the year ended: (in millions)

September 30, 2006 $13,717
September 24, 2005 $ 9,989
Inventories:

September 30, 2006 270
September 24, 2005 (as restated) 165

Net sales for the year ended:

September 30, 2006 $19,315
September 24, 2005 (as restated) $13,931

The following information was summarized from the fiscal year 2006 annual report of Hewlett Packard Company:

Cost of sales for year ended: (in millions)

October 31, 2006 $55,248
October 31, 2005 $52,550

Inventory:

October 31, 2006 $ 7,750
October 31,2005 $ 6,877

Net revenue for the year needed:

October 31, 2006 $ 91,658
October 31, 2005 $ 86,696

1. Calculate the gross profit for Apple Computer and Hewlett-Packard for each of the two year presented.
2. Calculate the inventory turnover ratios for both the companies for the most recent year.
3. Which company appears to be performing better? What other information should you consider to determine how these companies are performing in this regard?

Solution Summary

The problem deals with calculating ratios for two companies: Apple computers and HP.

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