Eastman Kodak reported the following information on inventory valuation in its 1998 annual report: (In millions) 1998
Question:
Eastman Kodak reported the following information on inventory valuation in its 1998 annual report:
(In millions) 1998 1997 At FIFO or average cost (approximates current cost) $ 907 $ 788 Work in process 569 538 Raw materials and supplies 439 460 1,915 1,786 LIFO reserve (491) (534)
Total $1,424 $1,252 Kodak reported that its cost of sales was $72.93 million for 1998. What would the firm’s cost of sales have been if it had valued inventory exclusively under the FIFO method? What factors are likely to be relevant to Kodak in setting its inventory valuation policies? As a financial analyst, what questions would you raise with the firm’s CFO about the firm’s inventory valuation and cost of sales?
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Step by Step Answer:
Business Analysis And Valuation Using Financial Statements Text And Cases
ISBN: 9780324015652
2nd Edition
Authors: Krishna G. Palepu, Paul M. Healy, Victor Lewis Bernard, W.Gordon Filby