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Jeffrey Gennette is the CEO of Macy's $($a United States retailer$)$ and the company uses the LIFO inventory costing method. Because Jeffrey's bonus is based on the company's earnings, he has directed the controller to use FIFO as the inventory costing method. Jeffrey did not tell the controller his real reason for the directive; instead, he stated that he thought FIFO better reflected the actual flow of inventory costs.

Review the following links and company websites, then answer the questions.

Kohl's

Macy's

Is Jeffrey's decision to select FIFO appropriate? Is Jeffrey wrong if this will help the company and also benefit him too?!

What are some of the pitfalls of a company basing a manager's or CEO's compensation on the company's earnings?

Would there be any situation in which merchandise inventories valued at LIFO approximate the cost of inventories using FIFO?

Using the links provided for Kohl's and Macy's, determine the inventory turnover ratio for the companies. What does this ratio tell you about these companies? How do the companies compare? You can reference pages $6-19$ and $6-20$ in your textbook.

Using the links provided for Kohl's and Macy's, calculate the number of days in inventory for the companies. What does this ratio tell you about these companies? How do the companies compare? You can reference pages $6-20$ and $6-21$ in your textbook.