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Sales Revenue, Costs of Goods Sold, and Inventory Amounts

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The following table presents sales revenue, cost of goods sold, and inventory amounts for three computer/electronics companies, Dell Inc., Hewlett-Packard Company, and Apple Inc.

$millions Fiscal Year Ending
Dell Inc. Jan. 30, 2009 Feb. 1, 2008 Feb. 2, 2007
Revenues $61,101 $61, 133 $57,420
Cost of goods sold 50,144 49,462 47,904
Inventory 867 1,180 660

Hewlett-Packard Oct. 31, 2008 Oct. 31, 2007 Oct. 31, 2006
Revenues (products Only) $91,697 $84,229 $73,557
Cost of goods sold 69,342 63,435 55,248
Inventory 7,879 8,033 7,750

Apple Inc. Sep. 28, 2008 Sep. 29, 2007 Sep. 30, 2006
Revenues $32,479 $24,006 $19,315
Cost of goods sold 21,334 15,852 13,717
Inventory 509 346 270

a. Compute the gross profit margin (GPM) for each of these companies for fiscal years 2008, 2007, and 2006.

b. Compute the inventory turnover ratios for fiscal years 2008 and 2007. (All three firms use FIFO inventory costing)

c. What factors might determine the differences among these companies' ratios?

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Solution Summary

The sales revenues, costs of goods sold and inventory amounts are determined. Hewlett-Packard Company and Apple Inc are analyzed.

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Below is the tutorial. Please don't hesitate to ask/message me for any clarification.

Gross profit margin = (Revenues - Cost of goods sold)/Revenues
Inventory turnover ratio = Cost of goods sold/Inventory

2009 2008 2007
Gross profit ...

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