As a team, select an industry to analyze. Reuters provides lists of industries under Sectors and Industries at www.reuters.com . (Click on an industry and then select Company Rankings for a list of members of that industry.) Each team member should acquire the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (Library files, the SEC EDGAR service at www.sec.gov , or the company itself are good sources.)

Required:
On an individual basis, each team member should write a short report answering the following questions about the selected company. Discuss any patterns across the companies that you as a team observe. Then, as a team, write a short report comparing and contrasting your companies.
1. If your company lists inventories in its balance sheet, what percentage is it of total assets for each of the last three years? If your company does not list inventories, discuss why this is so.
2. If your company lists inventories, what inventory costing method is applied to U.S. inventories?
a. What do you think motivated this choice?
b. If the company uses LIFO, how much higher or lower would net income before taxes be if it had used FIFO or a similar method instead?
3. Ratio Analysis:
a. What does the inventory turnover ratio measure in general?
b. If your company reports inventories, compute the ratio for the last three years.
c. What do your results suggest about the company?
d. If available, find the industry ratio for the most recent year, compare it to your results, and discuss why you believe your company differs or is similar to the industry ratio.
4. What is the effect of the change in inventories on cash flows from operating activities for the most recent year (that is, did the change increase or decrease operating cash flows)? Explain your answer.