ACC1AIS PART A INDIVIDUAL ASSIGNMENT

Question 1
A:
The inventory on the balance sheet was 334,754,000. The cost of sales for 2010 year was 2,137,146,000.
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B: Inventories are stated at the lower of cost and net realizable value. Net realizable value represents the estimated selling price less all estimated costs necessary to make the sale.
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C: The proportion of total assets was made up of inventory is 46.8631%.

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D: Inventory turnover= 2,137,146,000/((334,754,000+324,519,000)/2)=6.4833times. Days in turnover= 365/6.4833= 56.3days.

Fantastic Holdings (2010): inventory turnover=2.8 times, days in inventory=130days

Nick Scali (2010): inventory turnover =2.8times, 130days.

The inventory turnover measures the rate at which a company purchases and resells products to customers. As we see, JB HI-FI got the higher inventory turnover in 2010, which means JB HI-FI was carry less inventory than other two companies and had higher inventory management or higher sales. Higher inventory turnover also means JB HI-FI had more liquid cash flow and lower risk of stuck with obsolete inventory. Days in inventory can be defined as how long the inventory company holds. Obviously, JB HI-FI got the lower days in turnover, which means they got the better inventory liquid.

Question 2
A
Years | 2015 | 2014 | 2013 | Net credit sales | $600,000 | $720,000 | $480,000 | Credit and collection expense | Invoicing and mailing costs (0.5%) | 3,000 | 3,600 | 2,400 | Credit investigation fee on new customer (0.15%) | 900 | 1,080 | 720 | Uncollectible