Ratio Analysis
The following information was taken from Moser & Company’s 2015 annual report:
Net inventories reported on the balance sheet were $1,553 and 1,295 for years 2015 and 2014, respectively.
Replacement cost exceeded LIFO value by $978 and $1,054 for years 2015 and 2014, respectively.
Cost of goods sold for year 2015 was $8,936.1
The following information was extracted from BRAUNS Heavy Industries financial statements:
TIAPEI utilizes the FIFO cost flow assumption and its cost of goods sold for year 2015 was $5,266.5.
Inventory balances were $1,455 and 1,114 for years 2015 and 2014, respectively.
Required:
Calculate both firms’ inventory turnover ratio and indicate which one is better and why. Show all work. (NOT JUST MECHANICAL – THINK BEFORE DOING ANY CALCULATIONS.)