【正确答案】 A

【答案解析】With FIFO instead of LIFO: Inventory would be higher by $ 900000, the amount of the ending LIFO reserve. Cumulative pretax income would also be higher by $ 900000, so taxes paid would be higher by 0.40 × $ 900000 = $ 360000. Therefore cash would be lower by $ 360000. Cumulative retained earnings would be higher by (1-0.40)×$ 900000 = $ 540000. So assets under FIFO would be $ 11800000 + $ 900000 - $ 360000 = $ 12340000 and equity would be $1000000 + $1500000 + $ 540000 = $ 3040000. The assets-to-equity ratio would be $12340000/$ 3040000 =4.06.