Case: SUPER VALU
SUPERVALU reported the following data in its annual report.
|
Feb. 23, 2008 |
Feb. 28, 2009 |
Feb. 27, 2010 |
|
|
Total revenues |
$44,048 |
$44,564 |
$40,597 |
|
Cost of sales (using LIFO) |
33,943 |
34,451 |
31,444 |
|
Year end inventories using FIFO |
2,956 |
2,967 |
2,606 |
|
Year end inventories using LIFO |
2,776 |
2,709 |
2,342 |
(a) Compute SUPERVALU’s inventory turnover ratios for 2009 and 2010, using:
(1) Cost of sales and LIFO inventory.
(2) Cost of sales and FIFO inventory.
(b) Some firms calculate inventory turnover using sales rather than cost of goods sold in the numerator. Calculate SUPERVALU’s 2009 and 2010 turnover, using:
(1) Sales and LIFO inventory.
(2) Sales and FIFO inventory.
(c) Describe the method that SUPERVALU’s appears to use.
(d) State which method you would choose to evaluate SUPERVALU’s performance. Justify your choice.