Chapter 6, Problem 6.2IFRS

To determine

Inventory turnover ratio: This is a financial measure that is used to evaluate as to how many times a company sells or uses its inventory during an accounting period.

Formula of inventory turnover:

$\text{Inventory turnover = }\frac{\text{Cost of goods sold}}{\text{Average inventory}}$

To discuss: The effect of the differences in inventory accounting between IFRS and GAAP on inventory turnover ratio of the Company L using IFRS and the company using GAAP.