Chapter 13, Problem 15E

To determine

(a)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later adds in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier adds in the closing inventory.

Current Ratio:

The current ratio is computed by dividing the current assets by current liabilities. This helps in determining the liquidity of a company to pay liabilities.

The company that will report higher current ratio.

To determine

(b)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later adds in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier adds in the closing inventory.

Debt to Assets Ratio:

The debt to asset ratio is computed by dividing the total debt by total assets. This ratio helps in knowing whether the company is financed through debt or equity.

The company that will report higher debt to assets ratio.

To determine

(c)

Concept introduction:

FIFO:

FIFO is the method known as first in first out. In this method, the inventory is sold which is purchased first and the inventory purchased later adds in the closing inventory.

LIFO:

LIFO is the method known as last in first out. In this method, the inventory is sold which is purchased later and the inventory purchased earlier adds in the closing inventory.

Earning per share:

The earning per share is the share of profit computed on the basis of number of shares held by the equity shareholder. It is computed by dividing the net profit by total number of shares issued.

The company that will report higher earnings per share.