(a) Compute its current ratio, inventory turnover, and days' sales in inventory for Year 2 using LIFO numbers. Numerator / Denominator = Ratio Current ratio $360.0 / $165.0 = 2.2 to 1 Inventory turnover $880.0 / $275.0 = 3.2 times Days' sales in inventory $300.0 / $880.0 x 365 = 124.4 days 

(b) Compute its current ratio, inventory turnover, and days' sales in inventory for Year 2 using FIFO numbers. Numerator / Denominator = Ratio Current ratio $430.0 / $165.0 = 2.6 to 1 Inventory turnover $835.0 / $323.0 = 2.6 times Days' sales in inventory $370.0 / $835.0 x 365 = 161.7 days

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