This information is available for the Automotive and Other Operations Divisions of General Motors Corporation for 2006. General Motors uses the LIFO inventory method.
|
(in millions) |
2006 |
|
Beginning inventory |
$13,862 |
|
Ending inventory |
13,921 |
|
LIFO reserve |
1,508 |
|
Current assets |
64,131 |
|
Current liabilities |
67,822 |
|
Cost of goods sold |
164,682 |
|
Sales |
172,927 |
Instructions
(a) Calculate the inventory turnover ratio and days in inventory.
(b) Calculate the current ratio based on inventory as reported using LIFO.
(c) Calculate the current ratio after adjusting for the LIFO reserve.
(d) Comment on any difference between parts (b) and (c).