Question

Question: Comparative figures for Apple and Microsoft follow

\( million	Apple			Microsoft
	Current year	One year Prior	Two years prior	Current year	One year Prior	Two years prior
Inventory	\)2,349	\(2,111	\)1,764	\(2,902	\)2,660	$1,938
Cost of Sales	140,089	112,258	106,606	33,038	27,078	20,385

Required

Compute days’ sales in inventory for each company for the three years shown.

Short answer

Answer

Year	Apple	Microsoft
Current	6.12 days	32.06 days
One year prior	6.86 days	35.85 days
Two-year prior	6.03 days	34.70 days

Step-by-step solution

Definition of Days’ Sales in Inventory

The ratio determining the number of days that a business entity will require for selling all the units in the inventory is known as days of sales in inventory.

Days Sales in Inventory for Apple

Current year:

$$\begin{gathered} \text{Day'ssalesinventory=}\frac{Endinginventory}{costofgoodssold}\text{×365} \\ =\frac{\$2,349}{\$140,089}\times 365 \\ =6.12days \end{gathered}$$

One year Prior:

$$\begin{gathered} \text{Day'ssalesinventory=}\frac{Endinginventory}{costofgoodssold}\text{×365} \\ =\frac{\$2,211}{\$122,258}\times 365 \\ =6.86days \end{gathered}$$

Two year prior:

$$\begin{gathered} \text{Day'ssalesinventory=}\frac{Endinginventory}{costofgoodssold}\text{×365} \\ =\frac{\$1,176}{\$106,606}\times 365 \\ =6.03days \end{gathered}$$

Days Sales in Inventory for Microsoft

Current year:

$$\begin{gathered} \text{Day'ssalesinventory=}\frac{Endinginventory}{costofgoodssold}\text{×365} \\ =\frac{\$2,902}{\$33,038}\times 365 \\ =32.06days \end{gathered}$$

One year Prior:

$$\begin{gathered} \text{Day'ssalesinventory=}\frac{Endinginventory}{costofgoodssold}\text{×365} \\ =\frac{\$2,660}{\$27,078}\times 365 \\ =35.85days \end{gathered}$$

Two year Prior:

$$\begin{gathered} \text{Day'ssalesinventory=}\frac{Endinginventory}{costofgoodssold}\text{×365} \\ =\frac{\$1,938}{\$20,385}\times 365 \\ =34.70days \end{gathered}$$