This information (in millions) is available for the Automotive and Other Operations Divisions of General Motors Corporation

Question:

This information (in millions) is available for the Automotive and Other Operations Divisions of General Motors Corporation for a recent year. General Motors uses the LIFO inventory method.

Beginning inventory ... $ 13,921

Ending inventory ..... 14,939

LIFO reserve ....... 1,423

Current assets ........ 60,135

Current liabilities ...... 70,308

Cost of goods sold .... 166,259

Sales revenue ....... 178,199

Instructions

(a) Calculate the inventory turnover ratio and days in inventory.

(b) Calculate the current ratio based on inventory as reported using LIFO.

(c) Calculate the current ratio after adjusting for the LIFO reserve.

(d) Comment on any difference between parts (b) and (c).


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,...
Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial Accounting Tools for business decision making

ISBN: 978-0470534779

6th Edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

Question Posted: