Suppose this information (in millions) is available for the Automotive and Other Operations Divisions of General Motors Corporation for a recent year. General Motors Corporation uses the LIFO inventory method.
Beginning inventory $14,598
Ending inventory 15,950
LIFO reserve 1,345
Current assets 61,278
Current liabilities 70,106
Cost of goods sold 159,033
Sales revenue 182,688
INVENTORY TURNOVER RATIO - Calculating average inventory: Average inventory = (Beginning inventory + Ending inventory) / 2 = ($14598 + $15950) / 2 = $30548 / 2 = $15274 Calculating inventory turnover ratio: Inventory turnover = Cost of goods sold / Average inventory = $159033 / $15274 = 10.41 times DAYS IN INVENTORY- Days in inventory = 365 days / Inventory tuneover ratio = 365 days / 10.41 = 35.06 days
Inventory turnover ratio 10.41 times Days in inventory 35.06 days
Calculate the current ratio based on inventory as reported using LIFO.