High Liner Foods Incorporated, which is headquartered in Lunenburg, Nova Scotia, operates in the North American packaged foods industry. The company’s brands include High Liner, Fisher Boy, FPI, Sea Cuisine, Mirabel, and Royal Sea. The company also manufactures products for private labels. The information in Exhibit 7-25 was taken from the company’s 2014 annual report.
a. Note 8 (Exhibit) breaks down High Liner’s inventory into numerous categories. Which categories of inventory do you believe should be used in determining the inventory turnover ratio? Why?
b. Describe High Liner’s inventory valuation policies in your own words. Specifically, explain what High Liner includes in inventory cost, what cost formula(s) the company uses, and how it values its inventory on the statement of financial position.
c. Does High Liner use the same cost formula for all of its inventories? If not, explain what methods are used for which inventories and why this might be the case.
d. Calculate the inventory turnover ratio and days to sell inventory ratio for 2013 and 2012. Use the year-end inventory balances instead of the average inventory amounts.

  • CreatedJune 11, 2015
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