CP7-2 Finding Financial Information LO7-2, 7-4, 7-5, 7-7 Refer to the financial statements of Urban Outfitters given in Appendix C at the end of this book. Required: 1. The company uses lower of cost or market to account for its inventory. At the end of the year, do you expect the company to write its inventory down to replacement cost or net realizable value? Explain your answer. 2. What method does the company use to determine the cost of its inventory? Where did you find this information? 3. If the company overstated ending inventory by $10 million for the year ended January 31, 2012, what would be the corrected value for Income before Income Taxes? 4. Compute the inventory turnover ratio for the current year. Fiscal Year Ended Cost of GoodsSold / Average Inventory = Inventory Turnover 1/31/2012 What does an inventory turnover ratio tell you?