Topps Company Inventory Evaluation
Topps Company Inventory Evaluation
Michelle Rowley
ACC 281
Ms. LaKeitha Givens
August 5, 2013
Topps Company Inventory Evaluation Topps Company’s runs two business units, confectionery and entertainment (Edmonds, Olds, McNair, & Tsay, 2010). Their financial situation changed from the year 2004 to the year 2006. Their focus changed in 2006 with 80% of the employees reporting profit and loss to someone compared to 20% reporting before the change and also started performance tracking of their employees (Edmonds, Olds, McNair, & Tsay, 2010). This change put their focus on profitability and employee relations. Topps Company also made changes in their sports card licensors, now paying dividends, and reduced costs of Bazooka manufacturing (Edmonds, Olds, McNair, & Tsay, 2010). Evaluation of the Topps Company inventory is essential to determine how long products take to sell and what method is used to sell them to increase the company’s net sales. Evaluation of the Topps Company financial status involves evaluating their inventory turnover ratio and their average days to sell inventory in the year 2006 compared to the year 2005. To evaluate the number of days it takes the Topps Company to sell inventory, the inventory turnover ratio must first be determined. To determine the inventory turnover ratio, the cost of goods sold is divided by the amount of inventory (Edmonds, Olds, McNair, & Tsay, 2010). This determines the number of times the inventory is sold each year (Edmonds, Olds, McNair, & Tsay, 2010). In 2005, the Topps Company had a cost of goods in the amount of $189,200.00. Their inventory in 2005 was $32,936.00 (Edmonds, Olds, McNair, & Tsay, 2010). Dividing the cost of goods by the inventory, their turnover ratio in 2005 was 5.7. In 2006, the Topps Company had a cost of goods in the amount of $198,054.00. Their inventory in 2006 was $36,781.00 (Edmonds, Olds, McNair, & Tsay, 2010). Dividing the cost of goods by the
Michelle Rowley
ACC 281
Ms. LaKeitha Givens
August 5, 2013
Topps Company Inventory Evaluation Topps Company’s runs two business units, confectionery and entertainment (Edmonds, Olds, McNair, & Tsay, 2010). Their financial situation changed from the year 2004 to the year 2006. Their focus changed in 2006 with 80% of the employees reporting profit and loss to someone compared to 20% reporting before the change and also started performance tracking of their employees (Edmonds, Olds, McNair, & Tsay, 2010). This change put their focus on profitability and employee relations. Topps Company also made changes in their sports card licensors, now paying dividends, and reduced costs of Bazooka manufacturing (Edmonds, Olds, McNair, & Tsay, 2010). Evaluation of the Topps Company inventory is essential to determine how long products take to sell and what method is used to sell them to increase the company’s net sales. Evaluation of the Topps Company financial status involves evaluating their inventory turnover ratio and their average days to sell inventory in the year 2006 compared to the year 2005. To evaluate the number of days it takes the Topps Company to sell inventory, the inventory turnover ratio must first be determined. To determine the inventory turnover ratio, the cost of goods sold is divided by the amount of inventory (Edmonds, Olds, McNair, & Tsay, 2010). This determines the number of times the inventory is sold each year (Edmonds, Olds, McNair, & Tsay, 2010). In 2005, the Topps Company had a cost of goods in the amount of $189,200.00. Their inventory in 2005 was $32,936.00 (Edmonds, Olds, McNair, & Tsay, 2010). Dividing the cost of goods by the inventory, their turnover ratio in 2005 was 5.7. In 2006, the Topps Company had a cost of goods in the amount of $198,054.00. Their inventory in 2006 was $36,781.00 (Edmonds, Olds, McNair, & Tsay, 2010). Dividing the cost of goods by the
References: Edmonds, T., Olds, P., McNair, F., & Tsay, B. (2010). Survey of Accounting (2nd ed.). New York: McGraw-Hill Irwin