Financial Statements Of Kroger And Costco

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In this paper I will be analyzing the financial statements of Kroger and Costco. It is my job to compare and contrast the two companies’ based on their liquidity, solvency, and profitability. This will be done by integrating the concepts I have been introduced to throughout the course by using appropriate ratios and current accounting principles. I chose Kroger Company since it is an American retailer that was rated the country’s largest supermarket chain by revenue and second-largest general retailer. Kroger maintains markets in 34 states with over 2,600 supermarkets and multi-department stores. Also, I chose Costco since it is the third largest retailer in the United States falling right behind Kroger. Liquidity is important for a company since it is the short-term ability of the company to pay its liabilities and to meet sudden needs for cash. Creditors such as banks and suppliers are usually the most interested when it comes to analysing a company’s liquidity. There are four things to look at when comparing a company’s liquidity. First is the company’s working capital, the difference between the amounts of current assets and current liabilities, in which Kroger had a negative balance of 2,492 (millions) and Costco had a positive balance of 3,176 (millions). This shows that there is a greater likelihood that Costco will pay its liabilities and Kroger might not be able to pay back its current liabilities. Next is the current ratio, calculated by dividing current assets

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