Measure of chevrons investment in inventory relative

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Question 1: As of December 31, 2022, had Chevron paid more or less taxes over the years (since its inception) compared to what it would have paid had they used a FIFO cost flow assumption? By how much? (Assume a tax rate of 21% for all years).

Question 2: Did Chevron's choice of inventory method result in higher or lower net income for fiscal years 2022 and 2021 relative to what would have been reported using FIFO? By how much? (Assume a tax rate of 21% for all years).

Question 3: Calculate Chevron's inventory turnover ratio (COGS ÷ average inventory) for fiscal year 2022. What would Chevron's inventory turnover ratio have been if FIFO was used to value all inventories? Which measure of inventory turnover (LIFO or FIFO) is a better measure of Chevron's investment in inventory relative to sales?

Question 4: What are the advantages and disadvantages of using LIFO (relative to FIFO)?

Reference no: EM133560953

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