Jeremie Wire Management Essay

310 Words2 Pages
Sale – Sale cost ratio The cost of sales increased by ≈%3 which is lower than the sales’ increase(≈%4).So there is nothing to be worried about that currently. Days Sales in Receivables Despite the Days Sales in Receivables’ increase(≈%16.5) , The sales didn’t increase that much(increased by ≈%4).This may be due to customers who are not paying because of the defective products.Or maybe it’s because receivables aren’t valuated properly .In each case It requires attention and needs to be checked If the receivables really exist and properly valuated. Inventories The plastics inventory increased 24% although Copper Rod inventory increased 62%. Finished Goods Inventory increased 44% from 2007 to 2008. The price of plastics decreased from $0.19 to $0.13.The price of copper rod stayed the same at $.47 a pound. The increase in price of plastics can explain why inventories of plastics and copper changed. The expected value of Copper Rod = 5,500,000*.47 = 2,585,000 The expected value of plastics = 1,000,000 * .13 = 130,000 The expected value of plastics is not consistent with carrying costs at lower of cost or market pricing. This area needs to be checked. The square footage allotment also demands further examination. 25% (100,000sq.ft) is allocated to warehousing. Currently the copper rod inventory alone would demand 132,000 sq. ft. which is more than is allocated for the entire inventory. It should be made sure that all existing inventories have been recorded completely, It need to go to the warehouse and ensure all the inventories are recorded in the inventory ledger. Accounts Payable The accounts payable increased 6% while inventories increased much higher. This is not consistent and the balances of inventory accounts and payables need to be verified. Inventory should be counted to verify that it is correct and

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