Posted: April 6th, 2022
You can find the inventory methods used by companies whose stock is publicly traded by reading the Summary of Significant Accounting Policies contained in each company’s Form 10-K. The Form 10-K is the annual report to the Securities and Exchange Commission or SEC.
The Summary of Significant Accounting Policies will appear as the first or second item in the Notes to the Financial Statements.
Most publicly traded corporations will have an Investors Relations link at the bottom of their website’s home page. On the Investors Relations page, you will find a link to the corporation’s SEC filings.
Do an internet search and identify a company whose financial information you will be discussing. Everyone needs to choose a different company. (Post the url where this financial information can be found).
Identify the inventory method used.
Why might the company utilize this inventory method?
How does this method impact the ‘reported net income’?
Would you suggest another inventory method to the company that might be more effective in producing a different net income? Why or why not?
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