Institution Affiliation Speech or Presentation Example | Topics and Well Written Essays - 500 words

Institution Affiliation - Speech or Presentation Example Of FIFO and LIFO, which method would result in the higher pretax income? Which would result in the higher EPS? FIFO would result in higher pre-tax income because it has higher gross profit. EPS is net income divided by average outstanding shares of common stock and hence higher pre-tax income results in higher net income given taxes is fixed percentage of income. This implies that FIFO would also result in higher EPS. 3. Of FIFO and LIFO, which method would result in the lower income tax expense? Explain, assuming a 35 percent average tax rate. LIFO method would result in lower income tax expense because it has lower pretax income. Comparison Assuming that other expenses are $2000 †¢ FIFO: $9600 - $2000 = $7600 à   35% of $7600 = $2660 †¢ LIFO: $9080 - $2000 = $7080 à   35% of $7080 = $2478 4. Of FIFO and LIFO, which method would produce the more favorable cash flow? Explain. FIFO method would produce the more favourable cash flow because it has higher total ending balanc e. Problem 2: Reading Publically Available Financial Statements