Management Efficiency is determined by looking at six ratios. All key ratios to evaluate management efficiency for Monsanto and its competitors were obtained from Morningstar. One ratio to look at to determine management efficiency is accounts receivable turnover which is calculated by dividing net sales for year by accounts receivable. The accounts receivable turnover ratio indicates how many times on average accounts receivables are collected during a year. The ratio evaluates the ability of a company to efficiently issue credit to its customers and collected funds from them in a timely manner. High number are good so A/R Turnover graph in Appendix (2) shows that Monsanto had a lower turnover in 2012 and its highest turnover was in 2014 but compared to Dow and DuPont, Monsanto did not do as …show more content…
The average collection period is also referred to as the ratio of days to sales outstanding. It is the average numbers of days it takes a company to collect its accounts receivable. In other words, this financial ratio is the average number of days required to convert receivable into cash. The lower number is the better. Monsanto did its best at collecting during 2014 and its worst in 2012 but compared to Dow it didn’t do as well. Shown in Appendix (3), Monsanto still collected faster than DuPont and Syngenta. The inventory turnover ratio tells the number of times inventory was sold. It tells how efficient the company is at managing inventory. Inventory turnover is determined by dividing net sales by average inventory. A higher inventory turnover ratio is preferred, as it indicates that more sales are being generated given a certain amount of inventory. Monsanto’s highest turnover ratio, as seen in Appendix (4), was in 2013 and its lowest was in 2015. Monsanto performed better than Dupont and Syngenta but not as well as
As a retailer and a supplier, Sobeys has an extremely large balance in their inventory account. During 2015, the inventories are more than 50% of the total current assets, and 13% of the total assets. We will compare the inventory accounts of 100 randomly chosen locations out of the 258 locations, as well as the 3 Cash & Carry stores. The company’s main portion of the total inventories would be food related, and they have certain shelf lives. If the unsold inventories are sitting in the warehouse for too long, then the inventory will be unable to sell, and this brings risk to future revenues. So the company should monitor the entire food related inventory, and strictly follow the FIFO rule. We need to compare the average inventory on hand ratio to other competitors in the same industry to find out if the inventory control has serious issues. Also, inquire inventory evaluation at the warehouses and possibly observe a test count done by
Inventory Turnover in 2010 was 88.81 and its trailing 12 months has increased to 98.51.
Wars, complete with spies and lawyers masquerading as foot soldiers, rage ceaselessly in American homes. Some are as foreign as Samsung and Apple’s technology infringements, making headlines with fines and court declarations. Others deliver mail warnings against infringement for tracked, pirated media. But a more widespread and unnoticed battle grips the fields, supermarkets, and kitchens of America.
.... In addition, inventory turnover shows a consistent increase from 2.16 in 2011 to 2.38 and 2.49 for 2012 and 2013 respectively.
Inventory Turnover (2011 only): For the year 2011, the inventory turnover was calculated by the cost of good sold divided by the typical average amount of inventory. The average inventory was equal to the current inventory plus the prior inventory all divided then by two. Resulting in the 2011 Inventory Turnover to be equal to 3.480 because 5,385,088 / 1,547,223.5=
When analyzing Apple’s Accounts Receivable Turnover Ratio, the ratio is lower than the average industry. The ratio shows 11.96 times in account receivable collections during the year and how efficiently Apple uses its assets (Miller-Nobles, Mattison and Matsumura 781-782). Account receivable collections will increase after the release of the iPhone 6 and iPhone 6Plus by mid-September. Therefore, increasing the ratios of account receivable turnover and inventory turnover.
The competitors are around 0.5 for their cash flow adequacy ratio, which isn’t good, but when you compare it to Kodak, they are doing much better in handling their business obligations. Management Efficiency Eastman Kodak has a low accounts receivable turnover ratio. In 2014 it was 3.95. The low ratio signifies that Kodak might have a poor collecting process and should consider changing it.
The ratio of 1.7 for the last two years indicates consistency, although a lower number is preferred. As a company produces high value product, this could be a satisfactory ratio. By comparing it to 2011 when a ratio was 2.9, in the last two years a ratio improved
Its receivable turnover is 13.4 times per year, which is higher than C-P 10.5. In addition, the average number of days from sale on account to collection for P&G is 27.2 days while for C-P is 34.8 days. Based on the efficiency ratio analysis, P&G’s inventory moves quickly from purchase to sale, which the inventory turnover ratio is 6.2 and the time for the purchased inventories to be on sale is on the average of 58.6 days while C-P’s turnover ratio is 5.2 and the average days to sell is 70.6. This shows that P&G takes a shorter time than C-P to sell their inventories. However, C-P has a higher ability to pay their short-term liabilities, whereby the current ratio is 1.08 as opposed to P&G
...To check how successful it has been, we calculate debtor collection period ratio. (Dyson, 2004) Fixed Asset turnover: In this ratio, we seek the amount of sales that can be generated (or the amount of fixed assets necessary to achieve a level of sales) from a given level of fixed assets. (Klein, 1998) Total asset turnover: This ratio determines that how efficiently a firm is utilizing its assets. If the asset turnover ratio is high, the firm is using its assets effectively in generating sales. If this ratio is low, the firm may not be using its assets efficiently and shall either increase sales or eliminate some of the existing assets. (Argenti, 2002) Solvency Ratio Gearing: Gearing reflects the relationship between a company’s equity capital (ordinary shares and reserves) and its other form of long-term funding (preference share, debenture, etc.) (Black, 2000)
This ratio would be the asset turnover. It uses net sales divided by average assets. In 2005, Pepsi Co's asset turnover was at 1.02 while Coca Cola's asset turnover was at 1.06.... ... middle of paper ...
The inventory turnover decreased from 3.8 to 3.59. This is explained by the higher increase in the average inventory (37%) than the increase in cost of sales (29%) during 2005. This means that the rate at which inventory is sold is dropping
... inventory turnover was found to be very low. The low inventory turnover ratio was an indicator of inadequacy, since inventory usually has a rate of return of zero (Inventory Turnover Ratio Interpretation, 2009). It also implied either poor sales or excess inventory. A low turnover rate indicated poor liquidity, convincible overstocking, and obsolescence, but it would have also reflected a planned inventory build-up in the case of material shortages or in anticipation of rapidly rising prices. (Inventory Turnover Ratio Interpretation, 2009) And a rapid and unexplained rise in the number of sales per day in receivables in addition to growing inventories to cover the shortage was noted. The interviewee (Public Accountant) could smell something suspicious which led him for more detailed procedures and proactive investigation at the end of which a fraud was detected.
Inventory management is a method through which a business handles tangible resources and materials to ensure availability of resources for use. It is a collection of interdisciplinary processes including a full circle of the demand forecasting, supply chain management, inventory control and reverse logistics. Inventory management is the optimization of inventories of manufactured goods, work in progress, and raw materials. According to Doucette (2001) inventory management can be challenging at times; however, the need for effective inventory management is largely seen more as a necessity than a mere trend when customer satisfaction and service have become a prime reason for a business to stand apart from its competition. For example, Wal-Mart’s inventory management is one of the biggest contributors to the success of the company; effective and efficient inventory management is of critical importance.
The inventory turnover ratio of Under Armour increased from 2.04 times in 2008 to 2.99 times in 2012, as calculated in Appendix E. The financial information provided in the case is limited; thus, the inventory turnover ratio cannot be compared to its industry rivals. However, it is evident that Under Armour’s inventory turnover is slowly improving as they are gaining more market exposure, and thus selling more products.