Use the Following Financial Statements to Answer Exercises Below

Essay

Use the following financial statements to answer exercises below
The following are the income statement, the assets section of the balance sheet, and inventory disclosures from Terrific Toys, Inc., a toy manufacturer, for 2016.

Inventories
Inventories, net of an allowance for excess quantities and obsolescence, are stated at the lower of cost or market. Cost is determined by the first-in, first-out method.
-Using the financial information presented for Terrific Toys, Inc. to answer the following:
A. Compute the average inventory days outstanding for Terrific Toys, Inc. for 2016 and 2015. Discuss what this measures and the importance of this measurement in analyzing company performance.
B. Discuss what would be included in a detailed analysis of an inventory turnover decrease and possible reasons for a potential decrease in that ratio.
C. Is there any adjustment required to Terrific Toys' balance sheet amount of inventory for a LIFO reserve? Describe why such an adjustment is needed or not needed for Terrific Toys, Inc.