Ratio Analysis

Anonymous
timer Asked: May 4th, 2016

Question description


Looking for some serious help in accounting assignment.  I needed honest and willing to meet my dead line.  Instruction as following questions using grammatically correct language and appropriate APA citations. All questions need to be answer and with APA citations.  The book that used is Accounting Principles: A Business perspective, Financial Accounting text, read:  Chapter 8 “Measuring and Reporting Inventories, pages 359-395.  Question 7 is about Periodic or Perpetual.  There are some hints and suggestions for certain questions in this assignment.

Question 1:

Proficient:

Explain why proper inventory valuation is so important to the calculation of a company's "bottom line" net income.

What is the meaning of taking a physical inventory and why is it important to take a physical inventory when using a perpetual inventory system.

Distinguished:

Explain the accountant's role regarding taking a physical inventory.

Question 2:

Proficient:  Hints/Suggestion: To respond to the Proficient-level questions, review section 8.5 of the text, with emphasis on the each of the four inventory valuation methods covered:  Specific Identification, FIFO, LIFO, and Weighted Average.  Then, review the second third full paragraph on page 381

What is the cost flow assumption?

What is meant by the physical flow of goods?

What relationship exists between cost flows and the physical flow of goods in a company?

Distinguished:

Hints feel free to use the following response:  “Getting goods (physically) ready to sell should relate to the needs of the specific inventory item.  Perishables should physically be sold on the FIFO basis.  Accordingly, merchandisers of perishables will rotate their stock, selling the oldest units first (FIFO).  However, non-perishables, such as piles of coal, could be sold on the LIFO basis.”

To place the proper valuation on inventory, a business must determine which costs should be included in inventory cost. Getting goods ready to sell should include what items?

Question 3:

Proficient:

Identify and describe each of the four most commonly used inventory valuation methods. What are the main advantages of each method?

Distinguished:

Identify the main disadvantages of each inventory valuation method.

Question 4:

Proficient: Hints- A word of advice:  You cannot use the costs determined in the various exhibits of calculations of COGS in each of the four individual methods presented in the text because the costs presented in those exhibits are not constantly rising cost.

If inventory is being valued at cost and the price level is steadily rising, which of the following three methods of costing—FIFO, LIFO, or weighted average cost—will yield the lowest annual after tax net income?

Which method will yield the highest after tax net income in a scenario where the price level is steadily declining?

Distinguished:

Which of the three methods of inventory will in general yield an inventory cost most nearly approximating current replacement cost?

Question 5:

Proficient:

Some circumstances justify departures from the historical cost approaches of FIFO, LIFO, and weighted average cost. Several additional inventory methods may be used when circumstances warrant. Identify and describe each of these alternative methods. Include an example of when each method may be applied.

Distinguished:

Identify which methods could be used to determine whether there has been shrinkage or shortage in the physical inventory.

Question 6:

Proficient:

Identify and describe the ratio that can be used to analyze a company's inventory.

What does the ratio measure? What are the components of the ratio? How is the ratio computed?

How does a company know if the results of the calculation are helping or hurting the company's financial health?

Distinguished:Hint- make sure you compute and use the “average inventory” as is shown in the demonstration problem in section 8.7 of the text

Given the following information, calculate the inventory turnover for Lincoln Company, a large grocery

store chain. Evaluate the trend results.

-2014: Cost of goods sold—$1,043,000; Beginning inventory—$283,000; Ending inventory—$264,000.

-2013: Cost of goods sold—$820,000; Beginning inventory—$311,000; Ending inventory—$283,000.

Question 7:

Cripple Creek Hardware Store currently uses a periodic inventory system. Hoyt Braxton, the owner, is considering the purchase of a computer system that would make it feasible to switch to a perpetual inventory system. Hoyt is unhappy with the periodic system because it does not provide timely information on inventory levels. 

Hoyt has noticed on several occasions that the store runs out of good-selling items, while too many poor-selling are on hand. Hoyt is also concerned about lost sales while a physical inventory is being taken. The store currently takes a physical inventory twice a year. To minimize distractions, the store is closed on the day inventory is taken.

Hoyt believes that closing the store is the only way to get an accurate count.  You have been brought in to assess the situation and provide expert advice on which course of action to take—remain with the current periodic inventory system or switch to a perpetual inventory system. Present your findings to Hoyt, discussing whether switching to a perpetual inventory system will strengthen Cripple Creek Hardware's control over inventory items and eliminate the need for a physical inventory count.


Tutor Answer

(Top Tutor) Studypool Tutor
School: UT Austin
Studypool has helped 1,244,100 students
flag Report DMCA
Similar Questions
Hot Questions
Related Tags

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors