Question
Husky, Inc. has the following financial statement information for the years ending December 31, 2018 and 2017. (Dollar amounts are in millions of dollars). 2018
Husky, Inc. has the following financial statement information for the years ending December 31, 2018 and 2017. (Dollar amounts are in millions of dollars). 2018 2017 2018 2017 Cash $ 1,880 $ 2,087 Sales $ 67,420 $ 63,335 Accounts receivable, net 2,450 2,496 Cost of goods sold 48,250 46,435 Inventories 7,378 6,789 Gross profit $ 19,170 $ 16,900 Other current assets 214 677 Total current assets $ 11,922 $12,049 Accounts payable $ 4,585 $ 4,308 Other current liabilities 2,848 2,461 Total current liabilities $ 7,433 $ 6,769 The financial statement also includes the following note pertaining to inventories. Inventories are valued on a lower of last-in,first-out (LIFO) cost or market basis. At December 31, 2018 and 2017, inventories would have been greater by $1,379 million and $1,239 million, respectively, if they had been valued on a lower of first-in, first-out (FIFO) cost or market basis. Inventory includes product costs, inbound freight, warehousing costs, and vendor allowances. How would the company's 2018 gross profit margin change if the company had used FIFO rather than LIFO? a. The company's gross profit margin would increase by 0.2% points. b. The company's gross profit margin would increase by 0.4% points. c. The company's gross profit margin would decrease by 0.4% points. d. The company's gross profit margin would decrease by 0.2% points.
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