Question

Brick Brewing Co. Limited is a Canadian-owned brewery with its head office in Kitchener, Ontario. The company brews, sells, and markets its products under the Waterloo, Laker, Red Baron, Red Cap, and Formosa brand names.
The company also produces, sells, markets, and distributes Seagram’s Coolers across Canada. The information in Exhibit 7-22 was taken from the company’s 2014 annual financial statements.
Required:
a. Note 15, shown in Exhibit 7-22C, breaks down Brick’s inventory into three categories. Which categories of inventory do you believe should be used in determining the inventory turnover ratio? Why?
b. Describe Brick Brewing’s inventory valuation policies in your own words. Specifically, explain what Brick Brewing includes in inventory cost, what cost formula(s) the company uses, and how it values its inventory on the statement of financial position.
c. Calculate the inventory turnover ratio and days to sell inventory ratio for 2014 and 2013. Use the inventory values in 2014 and 2013 rather than the average inventory to calculate the ratios. Explain the amounts you selected from the financial statements to use in your calculation.
d. Calculate the current and quick ratios and comment on them.


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  • CreatedJune 11, 2015
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