The notes are part of the financial statements. They give details that would clutter the statements. This case will he
The notes are part of the financial statements. They give details that would clutter the statements. This case will help you learn to use a company's inventory notes. Refer to Canadian Tire's statements and related notes in Appendix A at the end of the book and answer the following questions:
1. How much was Canadian Tire's inventory at January 3, 2015? What about at December 28, 2013?
2. How does Canadian Tire value its inventories? Which cost method does the company use?
3. Using the cost-of-goods-sold as shown in Exhibit 5-4, Panel B, compute Canadian Tire's purchase of inventory during the year ended January 3, 2015.
4. Did Canadian Tire's gross profit percentage and rate of inventory turnover improve or deteriorate in 2014 (versus 2013)? Ending inventory for 2012 was $1,503.3. Considering the overall effect of these two ratios, did Canadian Tire improve during 2014? How did these factors affect the net income for 2014?