2. You are analyzing the balance sheet for Bed, Bath and Beyond, a retail firm t
ID: 2732490 • Letter: 2
Question
2. You are analyzing the balance sheet for Bed, Bath and Beyond, a retail firm that sells home furnishings, from February 26, 1995 (in millions):
Assets
Cash- $6.5
Rec. 3.1
Inventory 108.4
Current Assets 118.0
Fixed Assets 53.8
Total Assets $171.8
Liabilities
Accounts Payable $27.5
Other Current Liabities 18.6
Current Liabilties 46.1
Long term debt 16.8
equity 108.9
total liabilties $171.8
The firm had revenues of $440.3 million in 1994 and cost of goods sold of $249.2 million
a. estimate the net working capital
b. estimate non cash working capital
c. estimate the noncash working capital as a percent of revenues. If you were asked to estimate the noncash working capital needs for a new store for Bed, Bath, and Beyond, would you use this ratio? Why or why not?
Explanation / Answer
a. Net Working Capital = Current Assets- Current Liabilities 118-46.1 $ 71.9 Million The Net working Capital is $ 71.9 Million b Non Cash Working Capital = Current Assets net of Cash- Current Liabilities Current Assets Net of Cash = Current Assets- Cash 118-6.5 111.5 Million Non Cash Working Capital = 111.5-46.1 65.4 Non Cash Working Capital is $ 65.4 Million c Non cash Working Capital as a percentage of Revenues = Non Cash Working Caital*100/ Revenues 65.4*100/440.3 14.85% The answer is 14.85%
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