Question: Chess Company uses LIFO for inventory costing and reports the following financial data. It also recomputed inventory and cost of goods sold using FIFO for comparison purposes.
2011 2010
LIFO inventory . . . . . . . . . . . . . . . . . . . $150 $100
LIFO cost of goods sold . . . . . . . . . . . . 730 670
FIFO inventory . . . . . . . . . . . . . . . . . . . 220 125
FIFO cost of goods sold . . . . . . . . . . . . 685 -
Current assets (using LIFO) . . . . . . . . . 210 180
Current liabilities . . . . . . . . . . . . . . . . . 190 170
1. Compute its current ratio, inventory turnover, and days' sales in inventory for 2011 using
(a) LIFO numbers and
(b) FIFO numbers. (Round answers to one decimal.)
2. Comment on and interpret the results of part 1.