The current asset section from The Dow Chemical Companys 2012 annual report follows.

December 31 (in Millions)	2012	2011
Cash and cash equivalents	$4,318	$5,444
Marketable securities and interest-bearing deposits	-	2
Accounts and notes receivable
Trade (net of allowance for doubtful receivables - 2012: $121; 2011:$121)	5,074	4,900
Other	4,605	4,726
Inventories	8,476	7,577
Deferred income tax assets - current	877	471
Other current assets	334	302
Total current assets	$23,684	$23,422

The Dow Chemical inventory footnote follows.

The following table provides a breakdown of inventories:

Inventories at December 31 (in Millions)	2012	2011
Finished goods	$4,880	$4,327
Work in process	1,910	1,716
Raw materials	866	765
Supplies	820	769
Total inventories	$8,476	$7,577

The reserves reducing inventories from a FIFO basis to a LIFO basis amounted to $842 million at December 31, 2012 and $1,105 million at December 31, 2011. Inventories valued on a LIFO basis, principally hydrocarbon and U.S. chemicals and plastics product inventories, represented 29 percent of the total inventories at December 31, 2012 and 30 percent of total inventories at December 31, 2011.

A reduction of certain inventories resulted in the liquidation of some of the Companys LIFO inventory layers, increasing pretax income $91 million in 2012, $126 million in 2011 and $159 million in 2010.

1. Compute inventory turnover and average inventory days outstanding for 2012 (2012 cost of goods sold is $47,792 million). Comment on the level of these two ratios. Is the level what you expect given Dows industry? Explain.

2. Why does the reduction in inventory quantities caused an income increase in 2010 through 2012?