Albertsons reported that its inventory turnover ratio increased from 8.2 times in 2003 to 8.4 times in
Question:
Albertson’s reported that its inventory turnover ratio increased from 8.2 times in 2003 to 8.4 times in 2004. The following data appear in Albertson’s annual report.
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inventory turnover ratio increased" class="fr-fic fr-dii">(a) Compute Albertson’s inventory turnover ratios for 2003 and 2004, using:
(1) Cost of sales and LIFO inventory.
(2) Cost of sales and FIFO inventory.
(b) Some firms calculate inventory turnover using sales rather than cost of goods sold in the numerator. Calculate Albertson’s 2003 and 2004 turnover, using:
(1) Sales and LIFO inventory.
(2) Sales and FIFO inventory.
(c) Describe the method that Albertson’s appears to use.
(d) State which method you would choose to evaluate Albertson’s performance. Justify your choice.
Inventory Turnover RatioInventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,...
Step by Step Answer:
Albertsons Jan 31 2002 Jan 30 2003 Jan 29 2004 Revenues 36605 35626 35436 Cost of Sales LIFO 26179 2...View the full answer
Intermediate Accounting principles and analysis
ISBN: 978-0471737933
2nd Edition
Authors: Terry d. Warfield, jerry j. weygandt, Donald e. kieso
