Chapter 6, Problem 6.4MBA

To determine

Concept Introduction:

Liquidity metric no. of days' sales in inventory is a metric made on the basis of measuring the frequency of converting the inventory to cash. In general, it means the average time taken by the company to sell its inventory.

Profitability metric return on sales is the one which helps in analyzing the working performance of the company i.e. its growth, profits and gains and also reflects the relation between the expenses and revenue of the company.

The effect of picking FIFO or LIFO method on liquidity metric no. of days' sales in inventory and profitable metric return on sales.