Financial statement analysis course

Question# 3 Xiomi Co. is a retailer dealing in a single product. Beginning inventory at January 1 of this year is zero, operating expenses for this same year are $5,000, and there are 2,000 common shares outstanding. The following purchases are made this year: Units Per Unit Cost January 100 $ 10 $ 1,000 March 300 1 1 3,300 June 600 12 7,200 October 300 14 4,200 December 500 15 7,500 Total 1800 23,200 Ending inventory at December 31 is 800 units. End-of-year assets, excluding inventories, amount to $75,000, of which $50,000 of the $75,000 are current. Current liabilities amount to $25,000, and long-term liabilities equal $10,000. Required: a) Determine net income for this year under each of the following inventory methods. Assume a sales price of $25 per unit and ignore income taxes. i ) FIFO ii) LIFO iii) Average cost b) Compute the following ratios under each of the inventory methods of FIFO, LIFO, and average cost. i) Current ratio Debt-to-equity ratio iii) Inventory turnover iv) Return on total assets v) Gross margin as a percent of sales vi) Net profit as a percent of sales c) Discuss the effects of inventory accounting methods for financial statement analysis given the results from parts (a) and (b)