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Ultimate Corporation has assembled their management team to review their current inventory methods. They wish to ensure the optimal reporting figures for the upcoming quarter.
Ultimate Corporation has assembled their management team to review their current inventory methods. They wish to ensure the optimal reporting figures for the upcoming quarter. Below is a summary of their Inventory transactions: Date Units Purchased Purchase Price Units Sold Selling Price Jan 4 1500 580 Jan 15 500 $76 Feb 8 700 $130 Feb 15 400 582 Feb 28 1200 5122 Required: A) Determing the Ending Inventory and Cost of Goods Sold under: FIFO b. LIFO B) Which inventory method results in the lowest inventory turnover ratio for the quarter? If the company decides to change their inventory reporting method what would be required? 2) You have been asked to provide some guidance to the management team of OHYA Corporation with respect to their asset management. After reviewing their accounting policies, you notice a few items: 1) OHYA has replaced much of their equipment over the past fiscal year as they felt the old machinery was not as efficient. They believe the new equipment will increase output. Many of OHYA's competitors use older machinery which has not been replaced for many years. 2) OHYA has decided to use a diminishing balance method of depreciation for this equipment, whereas most of OHYA's competition uses a straight line method Management has asked you to prepare them for their annual investor call where many analysts will be in attendance. 1) What financial performance ratios may be in question based on the transactions and decisions OHYA has made related to their PP&E this year? 2) Which financial ratios would you expect to have positive result /negative result compared to OHYA's competitors based on this information? 3) How would you explain the performance to an analyst
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