One area that the company could seek to improve is on its Activity Ratio, which indicates that company’s ability to generate income and returns using its existing assets. With the company growing a rapid pace and demand growing ever quickly, Apple must find a way to be efficient with its inventory production as well as to make sure there are enough products for the consumers. From the days in inventory, Apple’s day in inventory has increased dramatically from 2005 to 2009. In 2005, Apple had a ratio of 4.91 as compared to 7.52 in 2009. It comes to show that Apple should look into organizing which inventory seeks more demand and which doesn’t. This way, it will reduce Apple’s cost of space and rent or holding onto the inventory. Fewer days are preferred in terms of Days in Inventory. Account Receivable also poses a slight problem for Apple Inc. The ratio for 2009, 12.64, has decreased significantly from 2005, 16.69. Apple should seek to increase the speed of collecting their account receivable by letting their customers know that they should pay payments on time in order to cover its own costs. Letting customers know that a penalty would be incurred if their account receivable are not paid in time. This way, this would increase the ratio for Account Receivable T.O. as well as decrease the number of days in Days in Receivable. If receivables were received on time, Apple would have enough payment to work with. That is to pay back its debt or... [continues]
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