RatioAssignment

RatioAssignment - Xiaoqiao Wang BMGT 340-0201 Cost of Goods...

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Unformatted text preview: Xiaoqiao Wang- BMGT 340-0201 Cost of Goods Sold to Sales= Cost of Goods Sold/ Sales COGS Sales COGS to Sales Change 2010 2,851.00 10,991.00 0.25939405 0.061213 2009 2,546.00 10,416.00 0.24443164-0.07929 2008 2,958.00 11,142.00 0.26548196 All Companies Ind Avg Ind. Median Mean Media n 74.9 8 76.14 75.0 3 69.2 2 A company’s Cost of Goods Sold is an expense of the company make in order to manufacture and sell a product. It is the percentage of sales that is used for expenses which varies directly with sales. Cost of Goods Sold (COGS) refers to the inventory costs of those goods a business has sold during a particular period. The higher the ratio is, the more cost it spends on the units per sale. COGS is used for the cost of the materials or labor used to make the products sold or the services delivered, but not included the cost of paying interest on loans, taxes owed, and depreciation on buildings and equipment, etc. Overall, QCOM already has relevantly low COGS to Sales ratio which it is a good thing. In 2009, the ratio decreased by 7.93% than in 2008, and increased by 6.12% in 2010 from 2009. This could be the change of their product they used, which might cause higher cost of their product. The rate of change is not a huge big number so it should not be too big of a problem. However, it fluctuates so maybe they should be careful of their spending on the cost of unit sold. The COGS to sales ratio for QCOM is lower than the industry average. In 2008 the COGS to sales ratio is lower than industry average by 48.43%; in 2009 the ratio is lower than industry average by 50.54%; and in 2010 the ratio is lower than industry average by 49.04%. Comparing with other industry company, like Nokia Corporation, its ratio is 69.22, above average and relevantly a lot higher than QCOM. It gives QCOM advantage since smaller Cost of goods sold to sale ratio because of less cost of every unit sold, leading more revenue. Receivable Turnover=Sales/ Account Receivable Sales A/R A/R turnover Change 2010 10,991.00 741.00 14.8327 0.0381152 2009 10,416.00 729.00 14.2881 4.1781736 2008 11,142.00 4,038.00 2.75929 All Companies Ind Avg Ind. Median Mean Media n 5.7 9 5.46 5.5 8 4.4 6 Accounts receivable Turnover ratio indicates how many times the accounts receivable have been collected during an accounting period. It is used to measure how efficient of a business operates. The higher the turnover, the faster the business is collecting its receivables. A low or declining accounts receivable turnover indicates a collection problem from its customer. Company should re-evaluate its credit policies to ensure timely receivable collections from its customers. This ratio increased from 2009 to 2010 in a 3 year period, which is a very good indication for the company. It means that customers are paying their bills on time. In 2010, “the increase in revenues from sales of equipment and services was primarily due to a $541 million increase in QCT revenues” (Qualcomm, Inc. Annual Report). In 2009, the ratio increased by 417.82 percent than in 2008, and increased by 3.81% in 2010 from the ratio increased by 417....
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RatioAssignment - Xiaoqiao Wang BMGT 340-0201 Cost of Goods...

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