Question

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

	Year 2			Year 1
LIFO inventory	$	180		$	130
LIFO cost of goods sold		760			700
FIFO inventory		250			155
FIFO cost of goods sold		715			—
Current assets (using LIFO)		240			210
Current assets (using FIFO)		310			235
Current liabilities		175			155

1. Compute its current ratio, inventory turnover, and days' sales in inventory for year 2 using (a) LIFO numbers and (b) FIFO numbers. (Round your answers to 1 decimal place.)
  

(a) Compute its current ratio, inventory turnover, and days' sales in inventory for year 2 using LIFO numbers. Numerator / Denominator = Ratio Current ratio 0 Inventory turnover 0 Days' sales in inventory 0 (b) Compute its current ratio, inventory turnover, and days' sales in inventory for year 2 using FIFO numbers. Numerator / Denominator = Ratio Current ratio 0 Inventory turnover 0 Days' sales in inventory 0

Answer 1

Current Ratio	LIFO	FIFO
Current Asset	240	310
Current Liabilties	175	175
Current Ratio	1.4	1.8
Inventory Turnover	LIFO	FIFO
Cost of goods Sold	760	715
Average Inventory (year1+year2)/2	155	202.5
Inventory Turnover	4.9	3.5
Days Sale Inventory	LIFO	FIFO
Average Inventory	155	202.5
Cost of goods Sold	760	715
No of Days in year	365	365
Days Sale Inventory	74.4	103.4