Financial Accounting Inventory

Case Assignment

Chevron Corporation

Attached are the Consolidated Statement of Income, Consolidated Balance Sheet, and selected footnotes from Chevron's 2014 Annual Report. Exhibit 1 shows a plot of crude oil prices between 1986 and 2014.

6.Calculate Chevron's inventory turnover ratio (COGSaverage inventory) for fiscal year 2014. What would have been Chevron's inventory turnover ratio if FIFO was used to value all inventories? Which measure of inventory turnover (LIFO or FIFO) is a better measure of Chevron's investment in inventory relative to sales?