Inventory Turnover and days’ sales in inventory Kroger, Sprouts Farmers Market, Inc., and Ingles Markets, 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: Kroger Sprouts Ingles Cost of merchandise sold $94,894 $3,460 $3,113 Inventory, end of year 8,123 264 372 Inventory, beginning of year 7,781 230 349 a. & b. Determine the inventory turnover and the number of days’ sales in inventory (use 365 days) for the three companies. Round all interim calculations to one decimal place. For days' sales in inventory, round final answers to one decimal place, and for inventory turnover, round to two decimal places. Company names Inventory Turnover Days' Sales in Inventory Kroger fill in the blank 1 fill in the blank 2 days Sprouts fill in the blank 3 fill in the blank 4 days Ingles fill in the blank 5 fill in the blank 6 days c. The inventory turnover ratios and days’ sales in inventory are similar for Kroger and Sprouts. Ingles has a lower inventory turnover and a higher days’ sales in inventory than Kroger and Sprouts. These results suggest that Kroger and Sprouts are more efficient than Ingles in managing inventory. d. If Ingles had Kroger’s 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. $___ million

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter6: Inventories

Section: Chapter Questions

Problem 3MAD: The general merchandise retail industry has a number of segments represented by the following...

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Inventory Turnover and days’ sales in inventory

Kroger, Sprouts Farmers Market, Inc., and Ingles Markets, 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:

	Kroger	Sprouts	Ingles
Cost of merchandise sold	$94,894	$3,460	$3,113
Inventory, end of year	8,123	264	372
Inventory, beginning of year	7,781	230	349

a. & b. Determine the inventory turnover and the number of days’ sales in inventory (use 365 days) for the three companies. Round all interim calculations to one decimal place. For days' sales in inventory, round final answers to one decimal place, and for inventory turnover, round to two decimal places.

Company names	Inventory Turnover	Days' Sales in Inventory
Kroger	fill in the blank 1	fill in the blank 2 days
Sprouts	fill in the blank 3	fill in the blank 4 days
Ingles	fill in the blank 5	fill in the blank 6 days

c. The inventory turnover ratios and days’ sales in inventory are similar for Kroger and Sprouts. Ingles has a lower inventory turnover and a higher days’ sales in inventory than Kroger and Sprouts. These results suggest that Kroger and Sprouts are more efficient than Ingles in managing inventory.

d. If Ingles had Kroger’s 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.
$___ million

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