Question
Provide explanation to the following questions Sitting on a meeting of analysts in your company you hear the following discussion of your colleagues: A: We
Provide explanation to the following questions
Sitting on a meeting of analysts in your company you hear the following discussion of your colleagues:
A: We have to compare two companies, where one uses FIFO and the other uses weighted average cost (WAC) for inventory management. I think this is a serious comparability distortion and we should make appropriate adjustments.
B: I agree, that we have a distortion but Im afraid we can not do much about it.
A: Based on the obligatory disclosures, we have two options: we can adjust the FIFO company to the WAC company or the other way round.
B: I would suggest that you leave the adjustment idea and just keep that in mind while interpreting the ratio values.
Which of the analysts turned out to be incompetent? Why?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started