Nordstrom Inc. operates department stores in numerous states . Selected financia

Question

Nordstrom Inc. operates department stores in numerous states . Selected financial statement data for january 29, 2012.

Nordstrom Inc.
Balance sheet (partial)
in millions end of year beginning year
cash cash equivalents 474 349
recievables 656 689
merchandise inventory 1060 913
prepaid expenses 80 61
other current assest 607 578

total current assets 2877 2590
total current liability 1870 1425

for the year net sales were 8173 and cost of goods sold was 4602(millions)

compute end of yeaar four liquidity ratios

current
acid
receivables
inventory

compare Nordstom's liquitiy with jcpenny and the indutry averages for department stores

ratio Nordstom jcpenney industry

curent 2.02:1 1.06:1
acid 0.87:1 0.29:1
receivables 57.0:1 28.2:1
inventory 3.5:1 7.:1

Nordstrom is above or below jcpenny for the current asset test ratios and the recivables turnover Nordstrom is better/worse than jcpenney for the inventory turnover.

Norstom is better worse than the industry avaerage from the current and acid test ratio but above /below the industry average for receivables turnover and the inventory turn over ratio.

Explanation / Answer

Nordstrom

Jcpenney

Rating

Bellow

Bellow

Worse

Better

Current ratio = Current assets / Current liabilities Current assets = 474+656+1060+80+607 = $2,877 Current liabilities = $1,870 Current ratio = 2877/1870 = 1.54 Acid test ratio = (Cash + Accounts receivables) / Current liabilities = (474+656) / 1870 = 1130 / 1870 = 0.60 Receivables turnover ratio = Net credit sales / Average receivables Sales = 8173 Average receivables = (656+689)/2 = 672.5 Receivables turnover ratio = 8173/672.5 = 12.15 Inventory turnover ratio = Cost of goods sold / Average inventory Cost of goods sold = 4602 Average inventory = (1060+913)/2 = 986.5 Inventory turnover ratio = 4602 / 986.5 = 4.66

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.