Question: Owens-Corning values its inventories using LIFO.This presents a problem when comparing its current ratio against that of a company using FIFO. Locate the latest financial

Owens-Corning values its inventories using LIFO.This presents a problem when comparing its current ratio against that of a company using FIFO. Locate the latest financial statements for Owens-Corning at the company page (www.owenscorning.com) or from the 10-K filed in the EDGAR archives (www.sec.gov/

edgarhp.htm).

Required

a. Compute the current ratio and the number of days’ sales (NDS) in ending inventory based on numbers reported on the balance sheet.

b. Find the FIFO value of inventory reported in the Notes to the Financial Statements and recompute the current ratio and NDS.

c. Compare the ratios based on LIFO to those based on FIFO.How different are they? Do you think that the observed differences are great enough to have an impact on a decision?

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