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2. Identify and explain two ratios that help management determine whether or not there is sufficient inventory on hand.

2. Identify and explain two ratios that help management determine whether or not there is sufficient inventory on hand.

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 25CE: Effects of Inventory Costing Methods Refer to your answers for Filimonov Inc. in Cornerstone...
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1. In a period of rising prices, the inventory reported in Huang Company's balance sheet is close to the replacement cost of the inventory. Gajurel Company's inventory is considerably below its current cost. Identify the inventory cost flow method being used by each company. Which company has probably been reporting the higher gross profit? 2. Identify and explain two ratios that help management determine whether or not there is sufficient inventory on hand.
Transcribed Image Text:1. In a period of rising prices, the inventory reported in Huang Company's balance sheet is close to the replacement cost of the inventory. Gajurel Company's inventory is considerably below its current cost. Identify the inventory cost flow method being used by each company. Which company has probably been reporting the higher gross profit? 2. Identify and explain two ratios that help management determine whether or not there is sufficient inventory on hand.
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