Question

Computing and Evaluating Receivables, Inventory, and PPE Turnovers

3M Company reports the following financial statement amounts in its 10-K report:

($ millions)	Sales	Cost of Sales	Receivables	Inventories	PPE, net
2014	$31,821	$16,447	$4,238	$3,706	$8,489
2013	30,871	16,106	4,253	3,864	8,652
2012	29,904	15,685	4,061	3,837	8,378

Required
Compute the receivables, inventory, and PPE turnover ratios for both 2014 and 2013. (Receivables turnover and inventory turnover are discussed in Chapters 6 and 7, respectively.) Round to two decimal places.

Receivable turnover rate:

2014	Answer
2013	Answer

Inventory turnover rate:

2014	Answer
2013	Answer

PPE turnover rate:

2014	Answer
2013	Answer

Answer 1

Receivable turnover rate = Net Credit sales / Average Receivable
2014 = $31,821 / [{$4,238 + 4253} / 2] = 7.70 times
2013 = $30,871 / [{$4,061 + 4253} / 2] = 7.43 times

Inventory turnover rate = Cost of Sales / Average Inventory
2014 = $16447 / [{$3706 + 3864} / 2] = 4.35 times
2013 = $16106 / [{$3864 + 3837} / 2] = 4.18 times

PPE turnover rate = Net sales / Average PPE
2014 = $31,821 / [{$8489 + 8652} / 2] = 3.71 times
  2013 = $30,871 / [{$8652 + 8378} / 2] = 3.62 times