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Calculate the quality of earnings ratio under each approach

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Exercise- The following comparative information is available for Larkspur, Inc. for 2017.

  LIFO FIFO
Sales revenue $90,640 $90,640
Cost of goods sold 39,610 26,970
Operating expenses (including depreciation) 24,850 24,850
Depreciation 9,620 9,620
Cash paid for inventory purchases 31,500 31,500

Determine net income under each approach. Assume a 30% tax rate.

Determine net cash provided by operating activities under each approach. Assume that all sales were on a cash basis and that income taxes and operating expenses, other than depreciation, were on a cash basis.

Calculate the quality of earnings ratio under each approach. (Round answers to 2 decimal places, e.g. 5.15.)

Reference no: EM131797365

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