William Company Uses the Periodic Inventory System and Has Provided

question 19

Short Answer

William Company uses the periodic inventory system and has provided the following data:
$$\begin{array} { l r r } & \text { Units } & \text { Amount } \\\text { Beginning inventory } & 6,000 & \$ 30,000 \\\text { Purchases } & 32,000 & 192,000 \\\text { Sales } & 28,000 & 280,000\end{array}$$ Requirement 1:
Calculate the following using both FIFO and LIFO inventory methods. $\begin{array}{ll} & \$ \text { FIFO } & \$ \text { LIFO } \\\text { A. Ending inventory }& \$----& \$----\\\text { B. Cost of Goods Sold }& \$----& \$----\\\text { C. Gross margin }& \$----& \$----\\\end{array}$ Requirement 2:
Conceptually,how does pretax income using FIFO (in times of rising prices)compare to LIFO pretax income? Explain your answer.

Understand how to apply the Dividend Discount Model (DDM) to determine the intrinsic value of a stock.

Comprehend the concept of market capitalization rate and its impact on stock valuation.

Calculate and interpret Price-Earnings (P/E) ratios and how they are affected by various factors.

Understand the role and calculation of the plowback (earnings retention) ratio in growth and valuation.

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