The following information is available for The Coca-Cola Company (in U.S. $ millions): In the notes to

Question:

The following information is available for The Coca-Cola Company (in U.S. $ millions):

The following information is available for The Coca-Cola Company (in

In the notes to its financial statements, Coca-Cola disclosed that it uses the FIFO and average cost methods to determine the cost of its inventory.
The industry averages for the inventory turnover, days in inventory, and current ratios are as follows:
___________________________2012 ____________2011
Inventory turnover .............. 7.8 times ............ 7.4 times
Days in inventory ................ 47 days .............. 49 days
Current ratio .......................... 1.2:1 ................. 1.1:1
Instructions
(a) Calculate Coca-Cola's inventory turnover, days in inventory, and current ratios for 2012 and 2011. Comment on the company's liquidity over the two years, and in comparison with the industry.
(b) What might be the reason that Coca-Cola uses more than one cost method to determine the cost of its inventory?

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Financial Accounting Tools for Business Decision Making

ISBN: 978-1118644942

6th Canadian edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine

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