Jeffrey Gennette is the CEO of Macy’s® (a United States retailer). Because Jeffrey’s bonus is based on the company's ear
Posted: Mon May 02, 2022 6:43 am
Jeffrey Gennette is the CEO of Macy’s® (a United States
retailer). Because Jeffrey’s bonus is based on the company's
earnings, he has directed the controller to use FIFO as the
inventory costing method. Jason did not tell the controller his
real reason for the directive; instead, he stated that he thought
FIFO better reflected the actual flow of inventory costs.
Review the following links and company websites then answer the
questions.
Source: The University Record Online: University of Michigan.
Retrieved from http://www.ur.umich.edu/0304/Jan19_04/10.shtml
Source: Kohl. Retrieved from
https://investors.kohls.com/investors/default.aspx
Source: Macy’s, Inc. Retrieved from
https://www.macysinc.com/
For Question 3, the Inventory Turnover
Ratio =
COGS/AVERAGE Inventory.
COGS refers to Cost of Goods Sold.
Average Inventory = (Beginning Inventory + Ending
Inventory)/2.
Remember that last year's ending inventory = this year's
beginning inventory.
For JCPenny you can find COGS (Cost of sales) on page 28 of
the 2020 (Year Ended January 30, 2021) Form 10K (pdf
page 33). You can find beginning inventory and ending
(merchandise) inventory on page F-8 (pdf page 71).
For Kohl’s, you can find COGS (Cost of merchandise sold) on page
44 (page 4 of the pdf) of the 2020 Annual Report.
You can also find beginning inventory and ending inventory
(merchandise inventories) on page 44 (page 44 of the pdf).
Hint for Question 3 and Question 4: The number one
error that students make on the Inventory Turnover Ratio and the
Number of Days in Inventory is that they
use ending inventory rather
than average inventory.
For Question 4, Number of Days in
Inventory =
Average Inventory/Average Daily Cost of Goods
Sold.
Average Daily Cost of Goods Sold = COGS/365.
retailer). Because Jeffrey’s bonus is based on the company's
earnings, he has directed the controller to use FIFO as the
inventory costing method. Jason did not tell the controller his
real reason for the directive; instead, he stated that he thought
FIFO better reflected the actual flow of inventory costs.
Review the following links and company websites then answer the
questions.
Source: The University Record Online: University of Michigan.
Retrieved from http://www.ur.umich.edu/0304/Jan19_04/10.shtml
Source: Kohl. Retrieved from
https://investors.kohls.com/investors/default.aspx
Source: Macy’s, Inc. Retrieved from
https://www.macysinc.com/
For Question 3, the Inventory Turnover
Ratio =
COGS/AVERAGE Inventory.
COGS refers to Cost of Goods Sold.
Average Inventory = (Beginning Inventory + Ending
Inventory)/2.
Remember that last year's ending inventory = this year's
beginning inventory.
For JCPenny you can find COGS (Cost of sales) on page 28 of
the 2020 (Year Ended January 30, 2021) Form 10K (pdf
page 33). You can find beginning inventory and ending
(merchandise) inventory on page F-8 (pdf page 71).
For Kohl’s, you can find COGS (Cost of merchandise sold) on page
44 (page 4 of the pdf) of the 2020 Annual Report.
You can also find beginning inventory and ending inventory
(merchandise inventories) on page 44 (page 44 of the pdf).
Hint for Question 3 and Question 4: The number one
error that students make on the Inventory Turnover Ratio and the
Number of Days in Inventory is that they
use ending inventory rather
than average inventory.
For Question 4, Number of Days in
Inventory =
Average Inventory/Average Daily Cost of Goods
Sold.
Average Daily Cost of Goods Sold = COGS/365.