The asset side of the 2015 balance sheet for Leggett & Plattis below. The company reported cost of sales of $2,998.8 million in2015 and $2,959.4 million in 2014. Use this information to answerthe requirements.
LEGGETT & PLATT, INCORPORATED
Consolidated Balance Sheets
December 31
2013
5
2014
(in millions)
Cash and cash equivalents
$ 272.7
$ 359.1
Trade and other receivables, net of allowance
of $15.2 and $19.2
467.4
446.2
Inventories:
Finished goods
270.5
275.7
Work in process
59.3
55.0
Raw materials and supplies
239.4
229.4
LIFO reserve
(73.3
)
(71.1
)
Total inventories, net
495.9
489.0
Other current assets
45.7
44.8
Total current assets
1,281.7
1,339.1
Machinery and equipment
1,184.5
1,161.7
Buildings and other
612.2
603.2
Land
44.5
45.3
Total property, plant and equipment
1,841.2
1,810.2
Less accumulated depreciation
1,266.6
1,237.4
Net property, plant and equipment
574.6
572.8
Goodwill
926.8
991.5
Other intangibles, less accumulated amortization
203.4
206.3
Sundry
121.6
145.2
TOTAL ASSETS
$3,108.1
$3,254.9
Required:
a.
Calculate common-sized inventories for both years and comment onany differences that you note. Given that the company is in thefurniture manufacturing industry, does this ratio seemappropriate?
b.
Compute inventory turnover for both years and interpret anychange. At December 31, 2013, Total inventories, net were $441million.
c.
Leggett & Platt uses LIFO for at least some of its inventorymethod. What would the company have reported as inventory in 2015and 2014 if the company had used the FIFO method? At December 31,2013, the LIFO reserve was $(85.7) million.
d.
Recalculate cost of goods sold (COGS) under the FIFO method.
e.
Recompute the inventory turnover ratios for 2015 and 2014 underthe FIFO method. What difference do you notice between theFIFO-based ratios and the LIFO-based ratios?
The asset side of the 2015 balance sheet for Leggett & Plattis below. The company reported cost of sales of $2,998.8 million in2015 and $2,959.4 million in 2014. Use this information to answerthe requirements.
| LEGGETT & PLATT, INCORPORATED Consolidated Balance Sheets | ||||
December 31 | 2013 | 5 | 2014 | |
(in millions) | ||||
Cash and cash equivalents | $ 272.7 | $ 359.1 | ||
| Trade and other receivables, net of allowance of $15.2 and $19.2 | 467.4 | 446.2 | ||
Inventories: | ||||
Finished goods | 270.5 | 275.7 | ||
Work in process | 59.3 | 55.0 | ||
Raw materials and supplies | 239.4 | 229.4 | ||
LIFO reserve | (73.3 | ) | (71.1 | ) |
Total inventories, net | 495.9 | 489.0 | ||
Other current assets | 45.7 | 44.8 | ||
Total current assets | 1,281.7 | 1,339.1 | ||
Machinery and equipment | 1,184.5 | 1,161.7 | ||
Buildings and other | 612.2 | 603.2 | ||
Land | 44.5 | 45.3 | ||
Total property, plant and equipment | 1,841.2 | 1,810.2 | ||
Less accumulated depreciation | 1,266.6 | 1,237.4 | ||
Net property, plant and equipment | 574.6 | 572.8 | ||
Goodwill | 926.8 | 991.5 | ||
Other intangibles, less accumulated amortization | 203.4 | 206.3 | ||
Sundry | 121.6 | 145.2 | ||
TOTAL ASSETS | $3,108.1 | $3,254.9 | ||
Required:
a. | Calculate common-sized inventories for both years and comment onany differences that you note. Given that the company is in thefurniture manufacturing industry, does this ratio seemappropriate? |
b. | Compute inventory turnover for both years and interpret anychange. At December 31, 2013, Total inventories, net were $441million. |
c. | Leggett & Platt uses LIFO for at least some of its inventorymethod. What would the company have reported as inventory in 2015and 2014 if the company had used the FIFO method? At December 31,2013, the LIFO reserve was $(85.7) million. |
d. | Recalculate cost of goods sold (COGS) under the FIFO method. |
e. | Recompute the inventory turnover ratios for 2015 and 2014 underthe FIFO method. What difference do you notice between theFIFO-based ratios and the LIFO-based ratios? |
