The asset side of the 2016 balance sheet for Leggett & Platt follows. The company reported cost of sales of $2,850.7 million in 2016 and $2,994.0 million in 2015. Use this information to answer the requirements.

LEGGETT & PLATT, INCORPORATED Consolidated Balance Sheets (excerpts)
(in millions)	Dec. 31, 2016	Dec. 31, 2015
Current Assets
Cash and cash equivalents	$281.9	$ 253.2
Trade receivables, net of allowance $7.2 and $9.3, at December 31, 2016 and 2015, respectively	450.8	448.7
Other receivables, net	35.8	71.5
Total receivables, net	486.6	520.2
Inventories
Finished goods	255.7	242.8
Work in process	52.6	42.6
Raw materials and supplies	245.1	241.8
LIFO reserve	(33.8)	(22.6)
Total inventories, net	519.6	504.6
Prepaid expenses and other current assets	36.8	33.2
Total current assets	1,324.9	1,311.2
Property, plant and equipment – at cost
Machinery and equipment	1,133.8	1,099.1
Buildings and other	559.4	548.2
Land	37.7	40.0
Total property, plant and equipment	1,730.9	1,687.3
Less accumulated depreciation	(1,165.4)	(1,146.5)
Net property, plant and equipment	565.5	540.8
Other Assets
Goodwill	791.3	806.1
Other intangibles, less accumulated amortization of $137.0 and $139.8 at December 31, 2016 and 2015, respectively	164.9	188.4
Sundry	137.5	117.2
Total other assets	1,093.7	1,111.7
Total assets	$2,984.1	$2,963.7

 Required

1. Calculate the common-size inventories for both years and comment on any differences that you note. Given that the company is in the furniture manufacturing industry, does this ratio seem appropriate? What additional information you need to make an informed judgement?

2. Compute inventory turnover for both years and interpret any change. At December 31, 2014, Total inventories, net were $481.4 million.

3. Leggett & Platt uses LIFO for at least some of its inventory method. What would the company have reported as inventory in 2016 and 2015 if the company had used the FIFO method? (LIFO reserve balances: $33.8 million in 2016; $22.6 million in 2015; and $73.0 million in 2014.)

4. Recalculate cost of goods sold (COGS) under the FIFO method.

5. Recompute the inventory turnover ratios for 2016 and 2015 under the FIFO method. What difference do you notice between the FIFO-based ratios and the LIFO-based ratios?

6. What is LIFO reserve? Why is the adjustment of LIFO reserve to produce FIFO-based numbers necessary?

7. What is the cumulative effect of LIFO inventory accounting on Leggett & Platt’s pre-tax income as of 2016 year-end compared to FIFO accounting?

8. What is the cumulative dollar amount of the company’s tax expense been affected by the use of LIFO inventory costing as of the year-end 2016, assuming the tax rate is 35%?

9. What effect has the use of LIFO inventory costing had on the company’s pre-tax income and tax expense for 2016 only (assume tax rate of 35%)?