FIFO versus LIFO: Ratio Analysis. Presented below is financial data for two companies that are identical in every respect except that Company X uses the FIFO method to value its inventory and Company Z uses the LIFO method to value its inventory. Using this data, calculate the following ratios: return on sales, inventory turnover, inventory-on-hand period, and current ratio. Which of the two companies is the better investment opportunity? Why? Company X Company Z Sales... $110,000 49,500 27,750 21,000 64,000 $110,000 Cost of goods sold Net income .. Inventory. 60,000 17,250 10,500 53,500 22,000 Current assets Current liabilities.. 22,000
FIFO versus LIFO: Ratio Analysis. Presented below is financial data for two companies that are identical in every respect except that Company X uses the FIFO method to value its inventory and Company Z uses the LIFO method to value its inventory. Using this data, calculate the following ratios: return on sales, inventory turnover, inventory-on-hand period, and current ratio. Which of the two companies is the better investment opportunity? Why? Company X Company Z Sales... $110,000 49,500 27,750 21,000 64,000 $110,000 Cost of goods sold Net income .. Inventory. 60,000 17,250 10,500 53,500 22,000 Current assets Current liabilities.. 22,000
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 1MCQ
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Using this data, calculate the following ratios: return on sales, inventory turnover, inventory-on-hand period, and
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