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(amounts in millions) March 31 2017 2016 416.3 278.3 270.0 154.6 Raw materials, supplies and manufactured products 146.3 123.7 2,704.5 2,512.6 1,893.3 1,816.7 Inventories total Work-in-progress Revenue Cost of goods sold Significant Accounting Policy Note Raw materials are valued at the lower of average cost and net realizable value. Spare parts to be used in the normal cost of business are valued at the lower of cost, determined on a specific identification basis, and net realizable value. Work-in-progress is stated at the lower of cost, determined on a specific identification basis, and net realizable value. The cost of work in progress includes materials, labour and an allocation of manufacturing overhead, which is based on normal operating capacity Required Using the above information, do the following: a. Calculate the inventory turnover ratios for CAE Inc. for 2017 and 2016. Comment on any changes. Use the 2017 and 2016 inventory rather than the average inventory to calculate the ratios. b. Calculate the gross margin ratio for 2017 and 2016. Comment on any changes. c. CAE's statement of income reports revenue as one amount even though its operations include manufacturing and the delivery of services. How might this reporting format affect the analysis of the gross margin ratio? d. CAE uses the specific identification cost formula for spare parts and work in progress. Explain how and why specific identification is an appropriate cost formula for CAE e. CAE uses average cost to value its raw materials inventories. Why would the specific item basis not be appropriate for this classification of inventory

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