Analyzing Inventories with Quarterly Data and LIFO Liquidation The inventory footnote from The Dow Chemical Companys first quarter 2019 SEC report follows. The company also reports cost of goods sold for Q1 of 2019 of $10,386 million.

Inventories, in millions	Mar. 31, 2019	Dec. 31, 2018
Finished goods	$5,703	$5,640
Work in process	2,239	2,214
Raw materials	940	941
Supplies	891	880
Total	$9,773	$9,675
Adjustment of inventories to a LIFO basis	(257)	(415)
Total inventories	$9,508	$9,260

Required a. What inventory costing method does Dow Chemical use? AnswerFIFOLIFO As of Q1 of 2019, what is the effect on cumulative pretax income and cash flow of using this inventory costing method, assuming a 30% average cumulative tax rate. Note: Do not use any negative signs with your answers. Effect on pretax income (in millions): $Answer AnswerIncreaseReduction Effect on cash flows (in millions): $Answer AnswerIncreaseReduction What is the effect on Q1 of 2019 pretax income and cash flow of using this inventory costing method, assuming a 21% tax rate? Note: Do not use any negative signs with your answers. Effect on pretax income (in millions): $Answer AnswerIncreaseReduction Effect on cash flows (in millions): $Answer AnswerIncreaseReduction b. Compute inventory turnover and average inventory days outstanding for Q1 of 2019. (Hint: How do we adjust the ratio for the number of days in a quarter instead of a year?) Note: Do not round until your final answer; round your final answer to one decimal place (for example, enter 6.8 for 6.77555). Inventory turnover Answer times Average inventory days Answer days c. Determine the FIFO values for inventories and cost of goods sold for Q1 of 2019. Recompute inventory turnover and DIO. FIFO inventories $Answer FIFO CGS $Answer Note: Do not round until your final answer; round your final answer to one decimal place (for example, enter 6.8 for 6.77555). Inventory turnover Answer times Average inventory days Answer days d. Which set of ratios would provide more useful analysis? AnswerFIFOLIFO