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Kroger: Asset turnover ratio The Kroger Company, a national supermarket chain, reported the following data (in millions) in its financial statements for a recent year: Total sales $108,465 Total assets: Beginning of year 29,281 End of year 30,556 A. Compute the asset turnover ratio. (Round to two decimal places.) B. Tiffany & Co. is a large North American retailer of jewelry. Tiffany’s asset turn­over ratio is 0.92. Why would Tiffany’s asset turnover ratio be lower than that of Kroger?

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Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207

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Section
BuyFindarrow_forward

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207
Chapter 5, Problem 3ADM
Textbook Problem
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Kroger: Asset turnover ratio

The Kroger Company, a national supermarket chain, reported the following data (in millions) in its financial statements for a recent year:

Total sales $108,465
Total assets:
Beginning of year 29,281
End of year 30,556
  • A. Compute the asset turnover ratio. (Round to two decimal places.)
  • B. Tiffany & Co. is a large North American retailer of jewelry. Tiffany’s asset turn­over ratio is 0.92. Why would Tiffany’s asset turnover ratio be lower than that of Kroger?

A.

To determine

Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.

To Calculate: The asset turnover ratio ofCompany K.

Explanation of Solution

Calculate the asset turnover ratio.

Total revenues = $108,465

Average assets = $29,918.5 (1)

Asset turnover ratio = TotalRevenuesAverage assets=$108,465$29,918.5=3.63

Working Notes:

Calculate the average assets of Company K

B.

To determine

To Explain: The reason that why Company T’s asset turnover ratio is lower than Company K’s.

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Chapter 5 Solutions

Financial & Managerial Accounting
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