The Average Turnover and Inventory Management - Coursework Example

The firms have a stout strategy for managing their inventory. Analyzing the progress of the two firms as far as inventory turnover is concerned, it can be concluded that Apple improved its inventory turnover by 33.7% {(111-83)/83} *100. On the other hand, Google inventory turnover reduced drastically by 89% {(377-41)/377}*100. The analysis shows that in the current year, Apple had efficient control measures on inventory as compared to Google.

According to (Messmore, 52), inventory turnover and day’s sales inventory are interlinked and inverse proportion to each other. He further elaborates that, an increase in inventory turnover reduces the day’s sales in inventory. This can be evidenced in the changes that occurred in the two inventory control measures for Apple and Google. Before year 1, Google had an inventory turnover of 377 and a day’s sale inventory of 1 day, in the current year inventory turnover was reduced to 41, thus increasing the day’s sales inventory to 9 days. Day’s inventory gives the number of days a firm takes to transform its inventory into cash. Apple has reduced the period from 10 days (prior year 3) to 3 days (current year) which shows its sales have increased. Google, on the other hand, has increased the number of days it takes to transform inventory into cash from zero days (prior year 2) to 9 days (current year). This shows its sales have been reducing rapidly. Read More