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Case 3 The Kroger Company Statistics Project Assignment (Statistics Project Sample)
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check the Attached questions and show your work in details
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Case 3” The Kroger Company
Inventory turnover refers to the ratio of goods sold and average inventory.
Inventory turnover = Cost of sales/ inventory
Jan 31, 2015
1) 85512/5688= 15.0337
2) 85512/6933=12.334
Feb 1, 2014
1) 78138/5651= 13.83
2) 78138/6801= 11.489
January 31, 2015
sales/ inventory
1) 108,465/5688= 19.06909
2) 108465/6933=15.6447
February 1,2014
1) 98375/5651= 17.408
2) 98375/ 6801= 14.46
In this case, I would prefer sales/ inventory method to cost of sales/inventory, as cost of sales is calculated using LIFO which may prove biased in firms using FIFO inventory system.
CA8 – 10 WRITING (FIFO and LIFO)
FIFO
LIFO
Sales
37,600,000
37,600,000
COGS
Beginning inventory
8,000,000
8,000,000
Purchases
29,900,000
29,900,000
Ending inventory
(37,6000,000)
(37,200,000)
300,000
700,000
Gross profit
37,3000,000
36,900,000
Less;
Depreciation
900,000
900,000
Expenses
1,050,000
1,050,000
Operating (15%)
4,950,000
4,950,000
Dividends
450,000
450,000
(7,350,000)
(7,350,000)
29,950,000
29,550,000
Tax (40%)
(1,198,000)
(1,182,000)
Net income
29,752,000
28,768,000
EPS
2.9752
2.8768
The company should not shift to LIFO. Investors will be attracted by high EPS under FIFO. Investment decisions are based on return on investment (ROI). In the capital market and money markets, prospective investors are willing to risk their money in market funds with high EPS, as they expect a high return from their investment.
P9 - 3 (L01) (LCRNV – Cost of Goods Sold and Loss)
Inventory valuation allowance.
...
Inventory turnover refers to the ratio of goods sold and average inventory.
Inventory turnover = Cost of sales/ inventory
Jan 31, 2015
1) 85512/5688= 15.0337
2) 85512/6933=12.334
Feb 1, 2014
1) 78138/5651= 13.83
2) 78138/6801= 11.489
January 31, 2015
sales/ inventory
1) 108,465/5688= 19.06909
2) 108465/6933=15.6447
February 1,2014
1) 98375/5651= 17.408
2) 98375/ 6801= 14.46
In this case, I would prefer sales/ inventory method to cost of sales/inventory, as cost of sales is calculated using LIFO which may prove biased in firms using FIFO inventory system.
CA8 – 10 WRITING (FIFO and LIFO)
FIFO
LIFO
Sales
37,600,000
37,600,000
COGS
Beginning inventory
8,000,000
8,000,000
Purchases
29,900,000
29,900,000
Ending inventory
(37,6000,000)
(37,200,000)
300,000
700,000
Gross profit
37,3000,000
36,900,000
Less;
Depreciation
900,000
900,000
Expenses
1,050,000
1,050,000
Operating (15%)
4,950,000
4,950,000
Dividends
450,000
450,000
(7,350,000)
(7,350,000)
29,950,000
29,550,000
Tax (40%)
(1,198,000)
(1,182,000)
Net income
29,752,000
28,768,000
EPS
2.9752
2.8768
The company should not shift to LIFO. Investors will be attracted by high EPS under FIFO. Investment decisions are based on return on investment (ROI). In the capital market and money markets, prospective investors are willing to risk their money in market funds with high EPS, as they expect a high return from their investment.
P9 - 3 (L01) (LCRNV – Cost of Goods Sold and Loss)
Inventory valuation allowance.
...
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