Inventory Costing Methods Analysis
Added on 2020-04-21
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Running head: FINANCIAL ACCOUNTINGFinancial accountingName of the studentName of the universityAuthor note
1FINANCIAL ACCOUNTINGTable of ContentsAnswer to P6 – 10 A..................................................................................................................2a.Ratio calculation..............................................................................................................2b.Comment.........................................................................................................................2Answer to P6 – 11A...................................................................................................................3a.Cost of goods available for sales.....................................................................................3b.No of units sold during the year......................................................................................3c.Cost of ending inventory and cost of goods sold............................................................3d.Calculation of gross profit...............................................................................................4Reference....................................................................................................................................5
2FINANCIAL ACCOUNTINGAnswer to P6 – 10 Aa.Ratio calculationRatio20142013Inventory turnover ratioCost of goods sold / Average inventoryPepsiCo Inc.9.438.94Coca-Cola Company5.615.63Days sales in inventoryInventory / cost of sales * 365PepsiCo Inc.37.1539.83Coca-Cola Company63.2564.93Gross profit margin Gross profit / sales *100PepsiCo Inc.53.69%52.96%Coca-Cola Company61.11%60.68%b.Comment It can be recognized from the above calculation that the inventory turnover ratio both2013 and 2014 for PepsiCo Inc is better as compared to Coca-Cola Company. In the sameway, the days sales in inventory is more for Coca-Cola Company as compared to PepsiCoInc. therefore, Coca-Cola Company is taking more times to sell all its inventory as comparedto PepsiCo Inc (Feng, McVay & Skaife, 2014). However, the gross profit margin for 2013 aswell as 2014 is more for Coca-Cola Company as compared to PepsiCo Inc. Therefore, thoughthe profitability position of Coca-Cola Company is better, the inventory turnover position isbetter for PepsiCo Inc.
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