Golf Challenge Corp. is retail sports store carrying golf apparel and equipment. The store is at the end of its second year of operation and is struggling. A 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. A loan agreement the store has with its bank, its prime source of financing, requires the store to maintain a certain profit margin and current ratio. The stores owner is currently looking over Golf Challenges preliminary financial statement for its second year. The numbers are not favorable. The only way the store can meet the required financial ratios agreed on with the bank for the required bank is to change from LIFO to FIFO. The store originally decided on LIFO because its tax advantages. The owner recalculates ending inventory using FIFO and submits those numbers and statements to the loan officer at the bank for the required bank review. The owner thankfully reflects on the available latitude in choosing the inventory costing method. 1. Describe what is tax advantage of LIFO the owner refers to above? 2. How does Golf Challenges use of FIFO improve its net profit margin and current ratio? 3. Is the action by Golf Challenges owner ethical? Explain.