(Inventory cost management; research) Randomly select annual reports for 10 publicly traded manufacturing companies. On the balance sheet, or in the related footnotes, for each firm, find the amounts for the three inventory accounts: raw material, work in process, and finished goods. Then, calculate the following for each firm, and the average for the 10 firms:
Ratio of Raw Material Inventory to total assets
Ratio of Work in Process Inventory to total assets
Ratio of Finished Goods Inventory to total assets
Ratio of total inventory to total assets
a. On average, how large is total inventory as a percentage of total assets for your 10 firms?
b. On average, which inventory component comprises the largest percentage of total inventory?
c. Do your answers to (a) and (b) suggest that effective inventory management is crucial to the success of these 10 firms? Discuss.