Week 6 discussions

1. Merchandise Inventory is assets held for sale in the ordinary course of business of wholesale and retail companies. Manufacturing inventories are raw materials or WIP that will be used or consumed in the production of finished goods to be sold. Review the Annual Report that you chose for the Week 3 Discussion topic #1 and based on what you've read in the text and in the Becker materials, explain how inventory is presented on the balance sheet and what further information you found in the footnote disclosures about the inventory method and "Impairment of Inventory", if any.

2. Describe the ratios used by financial analysts to monitor a company’s investment in inventory.

Which one would you consider most important and why?

3. There is an excellent comparison of the perpetual and periodic inventory systems for the Lothridge Wholesale Beverage Company in your textbook on pages 424-426.  Review the required transactions in Illustrations 8-3 and 8-4.  After concluding with reading the comparison of both methods on page 426 let us know your thoughts about these methods.  Do you have a business in mind that could benefit form one method vs the other?

4. We read about the Perpetual and the Periodic Inventory System. Regardless of which system is used, under both, we need to assign dollar amounts to the Ending Inventory and Cost of Goods Sold so that we can trace how costs flow through the system. Start by identifying what is included in inventory and then discuss how each item might be treated differently in the Perpetual vs. the Periodic Inventory System.

5. Who is using a manufacturer for the course project?  Using your knowledge gained from reviewing the company's financial reports let us know what costs should be included in inventory.

For those who used a retailer please do the same.

6. For years Dell has managed inventory daily.  Their reasoning was the rapid changes in technology for not wanting to be holding too many days or weeks of obsolete inventory.  Do you agree with their reasoning?