FOA-LCCTURE 3 MULTIPLE STEP INCOME STATEMENT AND INVENTOAY (WILLIAMS CHGGB) AND LECTURE 4 REPORTING AND ANALYZING LONG LIVED ASSETS (WILLIAMS CH9) 1. FIFO VS LIFO Ford Motor Comparty uses FIFO and LiFO to account for different segments of its inventories. A note to the company's most recent financial statements indicated that if FIFO had been used for the entire inventory. the total amount of inventory would have been almost 51 billion higher ( $8.3 million vs. 573 bilionl. . Indicate whether each of the following financial measurements would have been higher, lower. of unatfected had Ford Motor Company used FIFO for its entire inventory. Explain the reasoning: behind your answers. 1. Gross profit rate. ii. Reported net income. 1ik. Current ratio (Current ratio measures a firm's liquidity and it equals Current Acsets/Current Liabilities. Ford's current ratio is greater than 1 to 1). 18. Irventory turnover rate (See slides of Lecture 3). v. Accounts receivable turnover rate (See slides of Lecture 3). vii Cash paytnents made to suppliers. Vit Net cash flow from operations (Ford's operating cash flows are positive). 6. Provide your own assessment of whether using UFO has made Ford Motor Company more or less (1) liquid and (2) well-off. Defend your answers