9. [LIFO versus FIFO; effect on ratios; adjusting ratios]

a. Using only reported financial data, compute each of the fol- lowing ratios for both Zenab and Faybech. (i) Current ratio (20X1 and 20X2) (ii) Inventory turnover (20X2) (iii) Gross profit margin (20X2) (iv) Pretax profit margin (EBT to sales) (20X2)

b. Briefly compare the performance of the two firms in 20X2 based on the ratios computed in part a

c. Recalculate each of the ratios in part a with both companies: (1) On FIFO (if) On LIFO (iii) Using the current cost method

d. Select the basis of comparison for each of the four ratios that you feel is most meaningful. Justify each choice.