上一主题:CFA Level I:Fixed Income - Features of debts securities 习题精选
下一主题:CFA Level I:FSA : Accounting shenanigans on the cash flow statement(Reading 34)
返回列表 发帖
21. Nan Chen, CFA, is comparing a firm with two of its industry competitors. She obtains the following financial excerpts from the firm’s financial statements, as well as the inventory turnover ratio on two of its competitors.

Firm
Balance sheet data
    Inventory (FIFO basis) $45,000
    LIFO reserve (unchanged from year before) 10,000
Income statement data:
    Sales, gross $105,000
    Returns and allowances 5,000
    COGS 50,000

Comparative competitors’ financial ratios Company 1 Company 2
    Inventory turnover 1.90 1.05
The firm uses the LIFO inventory costing method under U.S.GAAP, which is consistent with its industry competitors. What conclusions should the analyst reach when comparing the firm’s inventory turnover ratio to those of ties competitors? A. Outperformed both competitors. B. Outperformed Company 1 only. C. Outperformed Company 2 only.

Ans: C. To calculate inventory, the FIFO inventory value must be adjusted to a FIFO value to be consistent with the other firms. With a $10,000 LIFO reserve that means that the FIFO inventory value is $10,000 more than a LIFO value inventory. Inventory turnover = = = = 1.43 which is less than 1.90 (#1) and more than 1.05 (#2). Note: if the LIFO reserve had changed the COGS would have to also be adjusted by adding the increase, or subtractive the decrease, from COGS to adjust the FIFO COGS to LIFO.

TOP

返回列表
上一主题:CFA Level I:Fixed Income - Features of debts securities 习题精选
下一主题:CFA Level I:FSA : Accounting shenanigans on the cash flow statement(Reading 34)