Inventory valuation, depreciation and ratios Jeans F’ All and Jeans ‘R’ Us are very similar companies in size and operation. Jeans F’ All uses FIFO and the straight-line depreciation method and Jeans ‘R’ Us uses LIFO and diminishing value depreciation. Identify which company will report the higher number for each of the following ratios:

1 current ratio 2 inventory turnover 3 profit margin 4 return on assets.

State any assumptions you need to make in answering this question.