The following information is available for The Coca-Cola Company (in U.S. millions):
In the notes to its financial statements, Coca-Cola disclosed that it uses the FIFO and average cost formulas to determine the cost of its inventory.
The industry averages for the inventory turnover, days in inventory, and current ratios are as follows
Instructions
(a) Calculate Coca-Cola’s inventory turnover, days in inventory, and current ratios for 2010 and 2009. Comment on the company’s liquidity over the two years, and in comparison with the industry.
(b) What might be the reason that Coca-Cola uses more than one cost formula to determine the cost of its inventory?
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