Required:
a. assume a sales price of $25 per unit.
Determine net income for this year under each of the folllowing inventory methods.
FIFO, LIFO, Average cost
b. Compute the following ratios under each of the inventory methods.
(1) Current ratio ……………………..
(2) Debt to equity ratio …………….
(3) Inventory turnover ………………
(4) Return on total assets …………
(5) Gross margin ratio………………….
(6) Net profit as percent of sales…….
c. Discuss the effects of inventory accounting methods for financial statement analysis.