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Quantifying the Effect of Inventory Write-offs on Ratios Under Armour reported the following in its 2018 Form 10-K. Under Armour's income statement reported 2018 cost
Quantifying the Effect of Inventory Write-offs on Ratios Under Armour reported the following in its 2018 Form 10-K. Under Armour's income statement reported 2018 cost of goods sold of $2,852,714 thousand. Its balance sheet reported inventories of $1,019,496 thousand in 2018 and $1,158,548 thousand in 2017. Restructuring Plans: As previously announced, our Board of Directors approved restructuring plans designed to more closely align our financial resources with the critical priorities of our business and optimize operations. We recognized approximately $203.9 million of pre-tax charges in connection with our restructuring plan. The costs incurred during the year ended December 31, 2018, include the following: Costs recorded in cost of goods sold ($ thousands) 2018 Inventory write offs $20.801 Total cost recorded in cost of goods sold S20,801 a. What effect did the 2018 inventory write-off have on pretax income during 2018? $ 0 X b. Calculate inventory turnover and days inventory outstanding for 2018. Note: Round your answers to one decimal place (for example, enter 6.8 for 6.77555). Inventory turnover: 2.62 X times Note: Do not round until your final answer; round your final answer to the nearest whole day. Days inventory outstanding: 0 x days c. If UnderArmour had not written off inventory in 2018, what would it have reported for cost of goods sold in 2018? $ 0 d. What would have been the inventory balances in 2018 and 2017? 2018 inventory balance $ 0 X 2017 inventory balance $ 0 0 X times Use the adjusted cost of goods sold and inventory balances to recalculate inventory turnover and days inventory outstanding. Did the inventory write-off make a significant difference? Note: Round your answers to one decimal place (for example, enter 6.8 for 6.77555). Inventory turnover Note: Do not round until your final answer; round your final answer to the nearest whole day. Days inventory outstanding o x days
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