Consider a publicly held company whose products you are familiar with. Some examples might include: Access the

Question:

Consider a publicly held company whose products you are familiar with. Some examples might include:

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Access the company’s public website and search for its most recent annual report. (Some companies will provide access to their financial data through an “investor relations” link, while others will provide a direct link to their “annual reports.”) After locating your company’s most recent annual report, open the file and review its contents. After reviewing the annual report for your selected company, prepare answers to the following questions.

a. What method does the company use to account for its inventory? Do you agree with the company’s selection of its inventory valuation method? Calculate the inventory as a percentage of total assets. Did the percentage increase or decrease over the last two years?

b. Calculate the inventory turnover ratio and the inventory-on-hand period for each of the last two years. Is the inventory-on-hand period increasing or decreasing? What might explain the change in the inventoryon-
hand period?

c. Calculate the days’ payable period for each of the last two years. Is the company paying its accounts payable faster or slower? What might explain this change?

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