Compute the change in johnson & johnson''s gross profit

Assignment Help Finance Basics
Reference no: EM131423347

Financial statements as of December 31, 2008, for Johnson & Johnson are as follows. The company used the FIFO inventory cost flow assumption to prepare these statements (dollars in millions).

2378_3d54e73f-5255-4eaf-8f36-c3a4c5b0cea5.png

Assume that on December 30, 2008, Johnson & Johnson decided to change from the FIFO to the LIFO inventory cost flow assumption. Assume that the ending inventory value under the LIFO assumption is $4,000.

REQUIRED:

a. Compute the change in Johnson & Johnson's current ratio associated with the change from FIFO to LIFO. Round to two decimal places.

b. Compute the change in Johnson & Johnson's gross profit and net income associated with the change from FIFO to LIFO. Assume that the dollar amount of the change is reflected in cost of goods sold.

c. How many tax dollars would be saved by the change from FIFO to LIFO?

d. Discuss some of the disadvantages associated with the change to LIFO.

Reference no: EM131423347

What should alpha use as an after-tax cost of debt

Alpha has an outstanding bond issue that has a 7.75% semiannual coupon, a current maturity of 20 years, and sells for $967.97. The firm's income tax rate is 40%. What should

What is the bonds yield to maturity

Assume there is a 12- year, 9.5% semiannual coupon bond, with a par value of $1000. The bond sellsy for $1,152. A. What is the bond's yield to maturity. B. What is the bond'

Does good corporate governance matter

Does good corporate governance matter? The Sarbanes-Oxley Act (SOX) was passed in 2002 by the U.S. Congress to address corporate governance reform. SOX has not been without

Compute efficiency variances for direct labor and materials

Compute the efficiency variances for direct labor and direct materials. Provide likely explanations for the variances. Do you have reason to be concerned about your performanc

Pessimistic durations and immediate predecessors

1. A series of activities must be completed in a coordinated fashion to complete a landscaping overhaul. The following table shows the activities their optimistic, most like

What is the expected return on m simon inc

The beta of M Simon Inc., stock is 1.3, whereas the risk-free rate of return is 0.06. If the expected return on the market is 0.13 percent, then what is the expected retur

Creating a loan application and amortization schedule

CKG Auto's Financial Department has asked you to finish developing an Excel workbook that it plans to use to use to analyze automotive credit application data stored in indi

How would you monitor the results with a tracking signal

Use exponential smoothing with 2 = 0.1 and 0.2 to forecast values for the data in Problem 10.4. Which smoothing constant gives better forecasts? How would you monitor the re

Reviews

Write a Review

 
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd