RUNNING HEAD INVENTORY PROPOSAL 1 Inventory Proposal Part Two of Three Team A QRB 501 March 07 2012 Terrance Feravich INVENTORY DATA 2 The research discussion is toward the data collection which converts times series data for McDonald s Fast Food Restaurant inventory analysis and University of Phoenix summer seasonal index The raw data represents inventory data over a four year time In this assignment the B team will illustrate statistical information discuss the inventory systems and problems explain the problem this team is addressing and show a table on how the data has been converted into dices Below are the inventory indexes from the previous assignment in week two McDonald s Inventory Analysis by Ratio Index 21 79 28 55 2001 2000 21 65 20 41 20 39 34 66 36 04 10 13 35 82 10 19 0 81 0 76 16 86 0 70 0 66 17 88 Year Liquidity Analysis Current Ratio Quick asset ratio Accounts receivable turnover Days supply of receivables Inventory turnover Days supply of inventory Working capital turnover Profitability Analysis Gross profit margin Operating expense ratio Net profit margin Asset turnover Return on assets Return on equity Capital Structure Analysis Debt to equity ratio Times interest earned Debt service margin Other Relevant Ratios NOPAT Margin Dividend Payout ratio Substantial Growth Rate Graph Information Obtained From Rugaber 2001 75 03 76 62 13 88 0 66 9 12 21 48 74 43 81 86 11 01 0 66 7 26 17 25 16 90 14 20 18 43 14 05 17 58 14 22 1 37 5 96 14 54 1 36 7 75 9 99 2002 0 71 0 66 18 01 20 26 35 07 10 41 74 57 86 28 5 80 0 64 3 73 8 69 1 33 5 65 9633 67 8 23 33 28 5 80 2003 0 76 0 71 23 34 15 64 33 34 10 95 74 83 83 48 8 58 0 66 5 69 12 28 1 16 7 30 N A 10 85 34 22 8 08 INVENTORY DATA 3 McDonald s Time Series Analysis Liquidity Analysis Current Ratio Quick asset ratio Accounts receivable turnover Days supply of receivables Inventory turnover Days supply of inventory Working capital turnover Profitability Analysis Gross profit margin Operating expense ratio Net profit margin Asset turnover Return on assets Return on equity Capital Structure Analysis Debt to equity ratio Times interest earned Debt service margin Other Relevant Ratios 2000 0 7 0 66 17 88 20 41 35 82 10 19 20 39 2000 75 03 76 62 13 88 0 66 9 12 21 48 2000 1 36 7 75 9 99 2000 2001 0 81 0 76 16 86 21 65 36 04 10 13 34 66 2001 74 43 81 86 11 01 0 66 7 26 17 25 2001 1 37 5 96 14 54 2001 2002 0 71 0 66 18 01 20 26 35 07 10 41 21 79 2002 74 57 86 28 5 80 0 64 3 73 8 69 2002 1 33 5 65 2003 0 76 0 71 23 34 15 64 33 34 10 95 28 55 2003 74 83 83 48 8 58 0 66 5 69 12 28 2003 1 16 7 3 9 63367 N A 2002 2003 INVENTORY DATA NOPAT Margin Dividend Payout ratio Substantial Growth Rate 4 10 85 34 22 8 08 16 90 14 20 18 43 14 05 17 58 14 22 8 23 33 28 5 80 Liquidity Analysis The year on year liquidity analysis of McD s demonstrate that ratios have been almost similar over the years and haven t changed significantly This implies that liquidity position of McD s has been consistent in four years Profitability Analysis INVENTORY DATA 5 Capital Structure Analysis INVENTORY DATA 6 Other Significant Ratio The dividend payout ratio has been higher in comparison to NOPAT margin and growth rate and also shows increase from 2000 and 2001 in 2002 and 2003 UOP Summer Inventory Index Year 1 Year 2 Year 3 Year 4 Forecast INVENTORY DATA Month 1 2 3 4 5 6 7 8 9 10 11 12 18 000 19 800 15 700 53 600 83 200 72 900 55 200 57 350 15 400 27 700 21 400 17 100 45 100 46 530 22 100 41 350 46 000 41 800 39 800 64 100 47 600 43 050 39 300 10 300 59 800 30 740 47 800 73 890 60 200 55 200 32 180 38 600 25 020 51 300 31 790 31 100 35 500 51 250 34 400 68 000 68 100 61 100 62 300 66 500 31 400 36 500 16 800 18 900 Graph Information Obtained From University of Phoenix 2012 Summer Historical Data UOP Summer Index Time Series Conversion 7 39 600 37 080 30 000 59 210 64 375 57 750 47 370 56 638 29 855 39 638 27 323 19 350 Combined Ratio Month Year 1 Year 2 Year 3 Year 4 INVENTORY DATA 8 1 2 3 4 5 6 7 8 9 10 11 12 Current Ratio Quick asset ratio Accounts receivable turnover Days supply of receivables Inventory turnover Days supply of inventory Working capital turnover 18 000 19 800 15 700 53 600 83 200 72 900 55 200 57 350 15 400 27 700 21 400 17 100 0 7 0 66 17 88 20 41 35 82 10 19 20 39 45 100 46 530 22 100 41 350 46 000 41 800 39 800 64 100 47 600 43 050 39 300 10 300 0 81 0 76 16 86 21 65 36 04 10 13 34 66 59 800 30 740 47 800 73 890 60 200 55 200 32 180 38 600 25 020 51 300 31 790 31 100 0 71 0 66 18 01 20 26 35 07 10 41 21 79 35 500 51 250 34 400 68 000 68 100 61 100 62 300 66 500 31 400 36 500 16 800 18 900 0 76 0 71 23 34 15 64 33 34 10 95 28 55 For McDonald s year 1 2 3 4 stand for 2000 2001 2002 and 2003 INVENTORY DATA 9 Reliable Inventory Research Information to Support Probable Causes Inventory mismanagement is one of the most common causes of company decline Goldman Associates 2010 When a company deals with inventory management the company usually contains powerful groups to help maximize the inventory investments Sales managers usually want to have a larger inventory to keep the shelves stocked at all times but mangers must be mindful of inventory does not have value until it is sold When a company has inventory sitting and not being sold the company is paying for the space maybe in a warehouse and the product itself This very reason can be because the seasons change or items contain damage when this occurs management lower prices to promote consumers to buy the merchandise Inventory Systems and Problems INVENTORY DATA 10 In some cases the inventory of a company can be the single largest …