LIFO liquidation adjustment
Can anyone make sure that this is correct?
If the question says that a company had a LIFO liquidation in 2014 and this resulted a decrease of COG by $263, when we calculate the ‘adjusted’ profit margin, are we supposed to deduct $263 from profit, to normalise the effect from liquidation?
2014 Net sales=11159, COG=9898, liquidation resulted a decrease of COG by $263.
Calculate profit margin = (11159-9898-263)/11159= 8.9%
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