1. The company uses lower of cost or market to account for its inventory. At the end of the year, do you expect the company to write its inventory down to replacement cost or net realizable value? Explain your answer.
2. What method does the company use to determine the cost of its inventory? Where did you find this information?
3. If the company overstated ending inventory by $10 million for the year ended January 31, 2012, what would be the corrected value for Income before Income Taxes?
4. Compute the inventory turnover ratio for the current year. What does an inventory turnover ratio tell you?