BTN 5-3 Corp. a sports carrying golf and The store is the end of its second year of operation and struggling. major problem is that its cost of inventory has continually increased in the past two years. In the first year of operations, the store assigned inventory costs using LIFO. agreement the store has with its bank, its prime source of financing, requires the sto maintain a current ratio. The store's owner is currently looking over Golf Challenge certain profit margin and The are not favorable. onl way the preliminary financial statements for its second year. numbers change from to FIFO, store can meet the required financial ratios a on with the bank store originally decided on because of its tax advantages. The owner recalculates ending inventory using FIFO submits those numbers and statements the bank for the required b review. The thankfully reflects on the available latitude in choosing the inventory costing method, owner .

Required 1. How does Golf Challenge's use of FIFO improve its net profit margin and current ratio?

2. Is the action by Golf Challenge's owner ethical? Explain