The following information is taken from the 1998 financial statements of LA ZBOY,INC., maker of recliners and other home furnishings, and the 1999 financial statements of MCDONALD S, maker of the Big Macfi and other fast
foods.
|
La Z Boy |
McDonald s |
|
|
Cost of goods sold |
$825.3* |
$3,205 |
|
Beginning inventory |
$79 |
$77 |
|
Ending inventory |
92 |
83 |
1. Before you do any computations, forecast which of the two companies will have a lower number of days sales in inventory.
2. Compute each company s number of days sales in inventory. Was your forecast in (1) correct?
3. How can these two very successful companies have number of days sales in inventory that are so different?