Search results
Results From The WOW.Com Content Network
The difference between the cost of an inventory calculated under the FIFO and LIFO methods is called the LIFO reserve (in the example above, it is $750, i.e. $5250 - $4500). This reserve, a form of contra account , is essentially the amount by which an entity's taxable income has been deferred by using the LIFO method.
Remember, she used up the two 10 cost items already under FIFO. If she uses average cost, it is 11 plus 20, for a profit of 14. If she used LIFO, the cost would be 10 plus 20 for a profit of 15. In year 3, Jane sells the last machine for 38 and quits the business. She recovers the last of her costs. Her total profits for the three years are the ...
In accounting, the inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year. It is calculated to see if a business has an excessive inventory in comparison to its sales level. The equation for inventory turnover equals the cost of goods sold divided by the average inventory.
Two very popular methods are 1)- retail inventory method, and 2)- gross profit (or gross margin) method. The retail inventory method uses a cost to retail price ratio. The physical inventory is valued at retail, and it is multiplied by the cost ratio (or percentage) to determine the estimated cost of the ending inventory. The gross profit ...
24/7 Help. For premium support please call: 800-290-4726
Stock turnover ratio [22] [23] Cost of Goods Sold / Average Inventory Receivables Turnover Ratio [24] Net Credit Sales / Average Net Receivables Inventory conversion ratio [5] 365 Days / Inventory Turnover Inventory conversion period Inventory / Cost of Goods Sold × 365 Days Essentially same thing as above ...
the Receivables conversion period (or "Days sales outstanding") emerges as interval B→D (i.e.being owed cash→collecting cash) Knowledge of any three of these conversion cycles permits derivation of the fourth (leaving aside the operating cycle, which is just the sum of the inventory conversion period and the receivables conversion period ...
For premium support please call: 800-290-4726 more ways to reach us