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Kracker Corp., Foodstuff, Inc., and Winston Stores, Inc. are three grocery chains in the United States. Inventory management is an important aspect of the grocery retail business. Recent balance sheets for these three companies indicated the following merchandise inventory (in millions) information: Kracker Foodstuff Winston Corp. Inc. Stores Cost of merchandise sold $33,580.0 $34,675.0 $35,040.0 Inventory, beginning of 1,951.3 2,131.8 1,582.1 year Inventory, end of year 1,912.7 2,048.2 1,489.9 a. & b. Determine the inventory turnover and the number of days' sales in inventory (use 365 days and round to the nearest day) for the three companies. Round all interim calculations to one decimal place. For days' sales in inventory, round final answers to the nearest day, and for inventory turnover, round to one decimal place. Company names Inventory Turnover Days' Sales in Inventory Kracker 17.38 X 21.00 v days Foodstuff 16.59 X 22.00 v days Winston Stores 16.00 v days c. The inventory turnover ratios and days' sales in inventory are similar for Kracker and Foodstuff. Winston Stores has a higher v inventory turnover and a lower v days' sales in inventory than Kracker and Foodstuff. These results suggest that Kracker and Foodstuff are less v efficient than Winston Stores in managing inventory. d. If Kracker had Winston Stores' days' sales in inventory, how much additional cash flow would have been generated from the smaller inventory relative to its actual average inventory position? Round interim calculations to one decimal place and your final answer to the nearest million. 459.84 X million

Kracker Corp., Foodstuff, Inc., and Winston Stores, Inc. are three grocery chains in the United States. Inventory management is an important aspect of the grocery retail business. Recent balance sheets for these three companies indicated the following merchandise inventory (in millions) information: Kracker Foodstuff Winston Corp. Inc. Stores Cost of merchandise sold $33,580.0 $34,675.0 $35,040.0 Inventory, beginning of 1,951.3 2,131.8 1,582.1 year Inventory, end of year 1,912.7 2,048.2 1,489.9 a. & b. Determine the inventory turnover and the number of days' sales in inventory (use 365 days and round to the nearest day) for the three companies. Round all interim calculations to one decimal place. For days' sales in inventory, round final answers to the nearest day, and for inventory turnover, round to one decimal place. Company names Inventory Turnover Days' Sales in Inventory Kracker 17.38 X 21.00 v days Foodstuff 16.59 X 22.00 v days Winston Stores 16.00 v days c. The inventory turnover ratios and days' sales in inventory are similar for Kracker and Foodstuff. Winston Stores has a higher v inventory turnover and a lower v days' sales in inventory than Kracker and Foodstuff. These results suggest that Kracker and Foodstuff are less v efficient than Winston Stores in managing inventory. d. If Kracker had Winston Stores' days' sales in inventory, how much additional cash flow would have been generated from the smaller inventory relative to its actual average inventory position? Round interim calculations to one decimal place and your final answer to the nearest million. 459.84 X million

Financial Accounting
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter7: Inventories
Section: Chapter Questions
Problem 7CP
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Inventory Turnover and days' sales in inventory Kracker Corp., Foodstuff, Inc., and Winston Stores, Inc. are three grocery chains in the United States. Inventory management is an important aspect of the grocery retail business. Recent balance sheets for these three companies indicated the following merchandise inventory (in millions) information: Kracker Foodstuff Winston Corp. Inc. Stores Cost of merchandise sold $33,580.0 $34,675.0 $35,040.0 Inventory, beginning of 1,951.3 2,131.8 1,582.1 year Inventory, end of year 1,912.7 2,048.2 1,489.9 a. & b. Determine the inventory turnover and the number of days' sales in inventory (use 365 days and round to the nearest day) for the three companies. Round all interim calculations to one decimal place. For days' sales in inventory, round final answers to the nearest day, and for inventory turnover, round to one decimal place. Company names Inventory Turnover Days' Sales in Inventory Kracker 17.38 X 21.00 v days Foodstuff 16.59 X 22.00 v days Winston Stores 16.00 days c. The inventory turnover ratios and days' sales in inventory are similar v for Kracker and Foodstuff. Winston Stores has a higher inventory turnover and a lower v days' sales in inventory than Kracker and Foodstuff. These results suggest that Kracker and Foodstuff are less efficient than Winston Stores in managing inventory. d. If Kracker had Winston Stores' days' sales in inventory, how much additional cash flow would have been generated from the smaller inventory relative to its actual average inventory position? Round interim calculations to one decimal place and your final answer to the nearest million. $ 459.84 X million Feedback V Check My Work a. 1. Determine the average daily cost of the merchandise sold by dividing the cost of goods sold by 365. 2. Divide the average inventory by the average daily cost of the merchandise sold. The average inventory is the total of the beginning and ending inventories divided by two.
Transcribed Image Text:Inventory Turnover and days' sales in inventory Kracker Corp., Foodstuff, Inc., and Winston Stores, Inc. are three grocery chains in the United States. Inventory management is an important aspect of the grocery retail business. Recent balance sheets for these three companies indicated the following merchandise inventory (in millions) information: Kracker Foodstuff Winston Corp. Inc. Stores Cost of merchandise sold $33,580.0 $34,675.0 $35,040.0 Inventory, beginning of 1,951.3 2,131.8 1,582.1 year Inventory, end of year 1,912.7 2,048.2 1,489.9 a. & b. Determine the inventory turnover and the number of days' sales in inventory (use 365 days and round to the nearest day) for the three companies. Round all interim calculations to one decimal place. For days' sales in inventory, round final answers to the nearest day, and for inventory turnover, round to one decimal place. Company names Inventory Turnover Days' Sales in Inventory Kracker 17.38 X 21.00 v days Foodstuff 16.59 X 22.00 v days Winston Stores 16.00 days c. The inventory turnover ratios and days' sales in inventory are similar v for Kracker and Foodstuff. Winston Stores has a higher inventory turnover and a lower v days' sales in inventory than Kracker and Foodstuff. These results suggest that Kracker and Foodstuff are less efficient than Winston Stores in managing inventory. d. If Kracker had Winston Stores' days' sales in inventory, how much additional cash flow would have been generated from the smaller inventory relative to its actual average inventory position? Round interim calculations to one decimal place and your final answer to the nearest million. $ 459.84 X million Feedback V Check My Work a. 1. Determine the average daily cost of the merchandise sold by dividing the cost of goods sold by 365. 2. Divide the average inventory by the average daily cost of the merchandise sold. The average inventory is the total of the beginning and ending inventories divided by two.
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