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(Solution) - The 2009 consolidated statement of operations the asset side of

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The 2009 consolidated statement of operations, the asset side of the balance sheet, and the inventory description that is part of Note 1 accompanying the financial statements of Molson Coors Canada Inc. are presented in Exhibit 7-14. Molson Coors Canada is a major beer brewing company in Canada. It sells its products mainly in Canada, the United States, and the United Kingdom, but about 9% of its products are sold in other parts of the world. All statement amounts are in millions of U.S. dollars.
In Exhibit 7-14
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE DATA)

Required:
Using the information in these statements, answer the following questions.
a. The asset side of the balance sheet breaks down Molson Coors' inventory into four categories: finished products, those in process, raw materials, and packaging materials. Only the finished products are currently in a state ready for sale. Which categories of inventory do you believe should be used in determining the inventory turnover ratio? Why?
b. In your own words, describe Molson Coors' inventory valuation policies.
c. The excerpt from Note 1 refers to assessing the shelf-life of its products and the creation of a reserve. Describe why the monitoring of the shelf-life is important to Molson Coors. What do you think the purpose of the reserve is?
d. Calculate the inventory turnover ratios for 2009 and 2008 and then convert them into days. Use the inventory values in 2009 and 2008 rather than the average inventory to calculate the ratios. Explain the amounts you selected from the financial statements to use in your calculation, and why.

 







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