examine the costs that Wal-Mart includes in inventory and cost of sales. Defend

Question

examine the costs that Wal-Mart includes in inventory and cost of sales. Defend the three (3) descriptions that Wal-Mart used to classify inventories, and suggest two (2) other descriptions that Wal-Mart could include within their notes that would be useful to financial statement users. Also, overall significance of inventory turnover to a retail store. Compare Wal-Mart’s 2012 and 2013 inventory turnover rate, and give your opinion on the way in which Wal-Mart could improve its inventory turnover ratio. Provide a rationale for your response.

Explanation / Answer

There are three inventory classifies:

=Raw materials Inventory, Work in process Inventory, Finished Goods inventory

Other descriptions:

They can use merchandise Inventory and Retail inventory it is useful for financial statement users.

Wal Mart Used the LIFO and FIFO Method for retail store.

Inventory Ratio =   Cost of Goods Sold / Inventory

2012

Inventory=40.71B

Cost of Sales    = 335.13B

= 335.13B / 40.71B

=8.23

2013

Inventory= 43.8B

Cost of Sales= 352.49B

=352.49B / 43.8B

=8.04

2013, Inventory ratio is little bit decrease which compare to 2013, they have to improve their performance

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