Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 32

Internet-Based Team Research: Examining an Annual Report
As a team, select an industry to analyze. Using your Web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a description of possible resources for these tasks.)
Required:
1. On an individual basis, each team member should write a short report that incorporates the following:
a. Describe the types of inventory held by the company. Does the company indicate its inventory management goals anywhere in its annual report
b. Describe the inventory costing method that is used. Why do you think the company chose this method rather than the other acceptable methods Do you think its inventory costs are rising or falling
c. Calculate the inventory turnover ratio for the current and prior year, and explain any change between the two years. (To obtain the beginning inventory number for the prior year, you will need the prior year's annual report.)
d. Search the 10-K for information about the company's approach for applying the LCM rule to inventory. Did the company report the amount of inventory written down during the year
2. Then, as a team, write a short report comparing and contrasting your companies using these attributes. Discuss any patterns across the companies that you as a team observe. Provide potential explanations for any differences discovered.