Cruz Company uses LIFO for inventory costing and reports the following financial data. It also recomputed the inventory and cost of goods sold using FIFO for comparison purposes.

2015 2014

LIFO inventory $330 $280

LIFO cost of goods sold 910 850

FIFO inventory 400 305

FIFO cost of goods sold 965

Current assets (Using LIFO) 390 360

Current Liabilities 175 155

Required:

1) Compute its current ratio, inventory turnover, and day's sales in inventory for 2015 using

(a) LIFO numbers and

(b) FIFO numbers. (Round your answers to 1 decimal place.)

Question

Blaine

Business

26 August, 19:28

Cruz Company uses LIFO for inventory costing and reports the following financial data. It also recomputed the inventory and cost of goods sold using FIFO for comparison purposes.

2015 2014

LIFO inventory $330 $280

LIFO cost of goods sold 910 850

FIFO inventory 400 305

FIFO cost of goods sold 965

Current assets (Using LIFO) 390 360

Current Liabilities 175 155

Required:

1) Compute its current ratio, inventory turnover, and day's sales in inventory for 2015 using

(a) LIFO numbers and

(b) FIFO numbers. (Round your answers to 1 decimal place.)

+1

Answers (1)

Know the Answer?

Emilio · Answer 1

Compute its current ratio, inventory turnover, and day's sales in inventory for 2015 using:

A. LIFO Numbers 2015

Current Ratio: current asset/current liability = 390/175 = 2.23

Inventory turnover = Cost of goods sold / average inventory = 965 / (400/12) = 965/33.33 = 29.0

Day's sales in inventory = Ending Inventory/Cost of goods sold * 365 = 330/910*365 = 132.36

B. FIFO numbers in 2015

Current Ratio: current asset/current liability = 390/175 = 2.23

Inventory turnover = Cost of goods sold / average inventory = 965 / (400/12) = 965/33.33 = 29.0

Day's sales in inventory = Ending Inventory/Cost of goods sold * 365 = 400/965*365 = 151.3