Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 28, Problem 8CQ
Just-in-Time Inventory If a company moves to a JIT inventory management system, what will happen to inventory turnover? What will happen to total asset turnover? What will happen to
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Inventory valuation methods are based on the systematic cash flow of adding and removing inventory costs. Each method has its advantages and disadvantages. When selecting an inventory method, management should select the method that best reflects operational needs.
Last in, first out (LIFO) and first in, first out (FIFO) are two of the inventory methods that we have discussed.
Assume that you are investing in a publicly traded company during a period of rising prices.
Would you prefer that the company use LIFO or FIFO for inventory valuation? Please support your response.
Explain the purpose of the inventory turnover ratio?
Is it possible for a firm to have a high current ratio and still have difficulty paying its current bills? Why or why not?
How should accounting be able to catch up with the high sales return rates, particularly on inventory management?
Chapter 28 Solutions
Corporate Finance
Ch. 28 - Prob. 1CQCh. 28 - Trade Credit forms In what form is trade credit...Ch. 28 - Prob. 3CQCh. 28 - Five Cs or Credit What arc the five Cs of credit?...Ch. 28 - Credit Period Length What are some of the factors...Ch. 28 - Credit Period Length In each of the following...Ch. 28 - Inventory Types What are the different inventory...Ch. 28 - Just-in-Time Inventory If a company moves to a JIT...Ch. 28 - Inventory Costs If a companys inventory carrying...Ch. 28 - Inventory Period At least part of Dells corporate...
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- Why is inventory management vital to the financial health of most firms?arrow_forwardWhat is Return on Assets? How do you calculate Inventory Turnover and The Number of Days' Sales in Inventory?arrow_forwardWhat does a very high inventory turnover ratio signify? Please provide your own example to explain your point.arrow_forward
- How does inventory turnover provide information about a company’s short-term liquidity?arrow_forwardExplain inventory turnover? Can this be too high everarrow_forwardIn a period of rising costs, which inventory valuation method would a company likely choose if they want to have the highest possible amount of inventory reported in the balance sheet? Multiple Choice Weighted-average cost Straight-line FIFO LIFOarrow_forward
- If inventory prices are rising the method of inventory valuation that gives the highest profit and the highest ending inventory is:a. FIFO.b. LIFO.c. Weighted average.d. Perpetual method.arrow_forwardInventory Turnover Ratio shows the speed at which the inventory will be converted into sales. Select one: True Falsearrow_forward(Financial Management) Everything else held constant, will an increase in the amount of inventory on hand increase or decrease the firm’s profitability?arrow_forward
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