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gulaghasi [49]
3 years ago
5

Danaher Corporation manufactures a variety of products, including electronic measurement instruments and network communications

products, water quality measurement systems, and medical and dental instruments. Selected financial statement data and related performance indicators follow.
($ in millions) 2012 2013 2014
Sales $18,260.4 $19,118.0 $19,913.8
Cost of goods sold 8,846.1 9,160.4 9,471.3
Average inventory 1,797.40 1,798.50 1,807.50
Selected performance measures:
Gross profit (%) 51.60% 52.10% 52.40%
Inventory turnover ratio 4.92 5.09 5.24


Required:
How well did Danaher manage its inventories over the three-year period?
Business
1 answer:
Nataly_w [17]3 years ago
3 0

Answer:

Danaher Corporation

Danaher managed its inventories well over the three-year period, as it continued to improve its inventory turnover ratio. The company did not engage in overstocking.  It was purchasing inventory every 2 months on the average.  Its sales continued to record improvement over the years.

Explanation:

a) Data and Calculations:

                 ($ in millions) 2012       2013        2014

Sales                        $18,260.4  $19,118.0  $19,913.8

Cost of goods sold      8,846.1     9,160.4      9,471.3

Average inventory       1,797.40    1,798.50  1,807.50

Selected performance measures:

Gross profit (%)             51.60%     52.10%    52.40%

Inventory turnover ratio  4.92       5.09         5.24

B) Danaher had a low inventory turnover ratio in 2012, but this improved in 2013 and 2014.  Usually, a low inventory turnover ratio implies weak sales and the keeping of excess inventory (known as overstocking).  No wonder the gross profit ratio was poorest in 2012 when compared with 2013 and 2014.  The higher inventory turnover ratios in 2013 and 2014 show that the sales for the two years were very strong.

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A note payable was executed by Sterling Inc. to Miami Finance Company. Sterling Inc. used $768,000 of its accounts receivable as
denpristay [2]

Answer:

See all the entries below.

Explanation:

a. Record the entry for Sterling to record the secured borrowing.

The entries will look as follows:

<u>Account Name                                    Debit ($)           Credit ($)    </u>

Cash (768,000 * 85%)                       652,800

  Note Payable                                                              652,800

<em><u>(To record the secured borrowing.)                                                    </u></em>

b. Record the entries for Sterling to record (1) the collections and (2) the payment to Miami for the first month.

The entries will look as follows:

<u>Account Name                                    Debit ($)           Credit ($)      </u>

Cash                                                   504,320

Refund Liability                                    20,480

  Accounts Receivable                                                 524,800

<u><em>(To record collection on receivables for first month.)                         </em></u>

Interest Expense                                     4,480

Note Payable                                      499,840

  Cash                                                                             504,320

<u><em>(To record payment to Miami for the first month.)                               </em></u>

c. Record the entries for Sterling to record (1) the collections for the second month and (2) the final payment to Miami.

The entries will look as follows:

<u>Account Name                                    Debit ($)            Credit ($)     </u>

Cash                                                    238,080

Allowance for Doubtful Debt                  5,120

  Accounts Receivable (w.1)                                          243,200

<u><em>(To record collection on receivables for second month Interest.)     </em></u>

Expense                                                   1,920

Note Payable                                       151,040

  Cash (w.2)                                                                      152,960

<u><em>(To record final payment to Miami.)                                                      </em></u>

Workings:

w.1: Accounts Receivable = Amount of accounts receivable as collateral – Cash received from customer = $768,000 - $524,800 = $243,200

w.2: Cash = Loan - First payment for principal = $652,800 - $499,840 = $152,960

3 0
3 years ago
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