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Accounting - Essay Example

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Based on reported numbers, highest inventory turnover for automotive was Ford motor company registering lowest inventory of 3.57% in the 2010, Toyota with 4.37% and the highest being Honda with 7.78%. Based on FIFO numbers, two companies experienced an increased inventory with…
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Automotive Companies Inventories, Gross Margin and Profit Margin Comparisons Based on reported numbers, highest inventory turnover for automotive was Ford motor company registering lowest inventory of 3.57% in the 2010, Toyota with 4.37% and the highest being Honda with 7.78%. Based on FIFO numbers, two companies experienced an increased inventory with Ford having 4.10%, Toyota 4.56% but Honda maintained its inventory of 7.78%.
Ford and Toyota experienced increased inventory turnover from the year 2008 to 2010 in contrast to Honda that had dropped inventory return based on reported and FIFO numbers. Based on reported number, Ford rebounded from the 2008 crisis through an increase of its inventory turnover from 13.51 in 2008 to 19.06 in 2010, Toyota increased from 10.63 in 2008 to 11.73 in 2010. Honda had a decrease from 7.17 in the year 2008 to 7.08 in 2010. Based on FIFO numbers, ford had an increase on its inventory turnover from 2008-2010 by 4.3 and Toyota by 0.89. Turnover drop based on reported and FIFO numbers for Ford remained constant.
Ford had highest gross margin increase from 2008-2010 of 11.63% based on reported numbers. Toyota and Honda companies had same increase of 1.41 from 2008-2010. Similarly, ford had the highest increase in profit margin by 17.66 %, Toyota by 6.08% and Honda by 5.44%. Based on FIFO numbers, ford profit margin increased from 2008-2010 by 17.72%, Toyota by 5.9% and Honda by 5.98%.
Ford was majorly affected by adjustments from LIFO to FIFO. Adjustments caused ford inventory increase from 3.57% to 4.10%. Gross margin increased from 12.43% to 12.49%. Consequently, the profit margin increased by 0.06%. This adjustment also affected where its inventories increased by 0.19%, had no effect on gross margin but profit margin increased by 0.03%. Read More
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