Automotive Companies Inventories - Essay Example

Automotive Companies Inventories, Gross Margin, and Profit Margin Comparisons Based on reported numbers, the highest inventory turnover for automotive was Ford motor company registering the lowest inventory of 3.57% in 2010, Toyota with 4.37%, and the highest being Honda with 7.78%. Based on FIFO numbers, two companies experienced an increased inventory with Ford having 4.10%, and Toyota having 4.56% but Honda maintained its inventory of 7.78%. Ford and Toyota experienced increased inventory turnover from the year 2008 to 2010 in contrast to Honda which had dropped inventory return based on reported and FIFO numbers.

Based on reported numbers, Ford rebounded from the 2008 crisis through an increase in its inventory turnover from 13.51 in 2008 to 19.06 in 2010, and Toyota increased from 10.63 in 2008 to 11.73 in 2010. Honda had a decrease from 7.17 in the year 2008 to 7.08 in 2010. Based on FIFO numbers, Ford had an increase in its inventory turnover from 2008-2010 by 4.3 and Toyota by 0.89. Turnover drop based on reported and FIFO numbers for Ford remained constant. Ford had the highest gross margin increase from 2008-2010 of 11.

63% based on reported numbers. Toyota and Honda's companies had the same increase of 1.41 from 2008-2010. Similarly, Ford had the highest increase in profit margin 17.66 %, Toyota by 6.08%, and Honda by 5.44%. Based on FIFO numbers, Ford's profit margin increased from 2008-2010 by 17.72%, Toyota's by 5.9% and Honda's by 5.98%. Ford was majorly affected by adjustments from LIFO to FIFO. Adjustments caused Ford's inventory to increase from 3.57% to 4.10%. Gross margin increased from 12.43% to 12.49%. Consequently, the profit margin increased by 0.06%. This adjustment also affected where its inventories increased by 0.

19%, had no effect on the gross margin but the profit margin increased by 0.03%.