Gehl Company manufactures a full line of construction and agriculture equipment. The following information is available for Gehl for 2006. The company uses the LIFO inventory method.
|
(in thousands) |
2006 |
|
Beginning inventory |
$ 39,121 |
|
Ending inventory |
48,649 |
|
LIFO reserve |
29,652 |
|
Current assets |
291,033 |
|
Current liabilities |
89,504 |
|
Cost of goods sold |
381,813 |
|
Sales |
486,217 |
Instructions
(a) Calculate the inventory turnover ratio and days in inventory.
(b) Calculate the current ratio based on LIFO inventory.
(c) After adjusting for the LIFO reserve, calculate the current ratio.
(d) Comment on any difference between parts (b) and (c).