In a period of rising prices when compared to a c
In a period of rising prices, when compared to a company that uses weighted average cost for inventory, a company using FIFO will most likely report higher values for its:
A.return on sales.
B.debt-to-equity ratio.
C.inventory turnover.
参考解答
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2024-09-08 23:07:41
Ans:A.
In periods of rising prices FIFO results in a higher inventory value and a lower cost of goods sold and therefore a higher net income.The higher net income increases return on sales.
B is incorrect.The higher reported net income also increases retained earnings, and therefore results in a lower debt-to-equity ratio not a higher one.
C is incorrect.The combination of higher inventory and lower cost of goods sold decreases inventory turnover (CGS/inventory).
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