Question
Globetrade is a retailer that buys virtually all of its merchandise from manufacturers in a country experiencing significant inflation. Globetrade is considering changing its method
Globetrade is a retailer that buys virtually all of its merchandise from manufacturers in a country experiencing significant inflation. Globetrade is considering changing its method of inventory costing from first-in, first-out (FIFO) to last-in, first-out (LIFO). What effect would the change from FIFO to LIFO have on Globetrades current ratio and inventory turnover ratio? a. Both the current ratio and the inventory turnover ratio would increase. b. The current ratio would increase but the inventory turnover ratio would decrease. c. The current ratio would decrease but the inventory turnover ratio would increase. d. Both the current ratio and the inventory turnover ratio would decrease.
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