Instructions From SEDAR (www.sedar.com) or the company websites, access the financial statements of Loblaw Companies Limited for

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Instructions

From SEDAR (www.sedar.com) or the company websites, access the financial statements of Loblaw Companies Limited for its year ended January 3, 2015, and Empire Company Limited for its year ended May 2, 2015. Review the financial statements and answer the following questions.

(a) Describe the businesses that Loblaw and Empire operate in.

(b) What is the amount of inventory reported by Loblaw at January 3, 2015, and by Empire at May 2, 2015? What percent of total assets is invested in inventory by each company? How does this compare with the previous year?

(c) Identify the inventory policies for each company that support the inventory values reported on their respective balance sheets. Comment on whether any aspects of inventory valuation might be open to significant estimation.

(d) How much did each company report for inventory expenses in the current and previous year? What was the writedown (and reversal of writedowns) related to inventories for the current and previous year for each company?

(e) What are vendor rebates and allowances? How do the companies account for these? Is this the appropriate treatment? How might the amount recognized change if pro- posed changes in the conceptual framework are adopted?

(f) Calculate and compare the inventory turnover ratios and days to sell inventory for the two companies for the most current year.

(g) Comment on the results of your calculations in (f) above. Would any differences identified in any of the earlier analyses above help explain differences in the ratios between the two companies? What might be some reasons for the differences between the two companies?

Inventory Turnover Ratio
Inventory 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,...
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-1119048534

11th Canadian edition Volume 1

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy

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