How much excess inventory do you estimate

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Question - On September 30, 2017, Germany-based Ceconomy (which owns consumer electronics retailer MediaMarktSaturn) reported in its annual financial statements that it held inventories for 52 days' sales. The inventories had a book value of €2,553 million. Ceconomy's statutory tax rate was 30.5 percent.

Required -

a. How much excess inventory do you estimate Ceconomy is holding in September 2017 if the firm's optimal Days' Inventories is 45 days?

b. Calculate the inventory impairment charge for Ceconomy if 50 percent of this excess inventory is deemed worthless. Record the changes Ceconomy's financial statements from adjusting for this impairment.

Reference no: EM132627123

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