menu
bartleby
search
close search
Hit Return to see all results
close solutoin list

Analyze and compare Costco, Wal-Mart, and Nordstrom The general merchandise retail industry has a number of segments represented by the following companies: Company Name Merchandise Concept Costco Wholesale Corporation (COST) Membership warehouse Wal-Mart Stores, Inc. (WMT) Discount general merchandise Nordstrom, Inc. (JWN) Fashion department store For a recent war, the following cost of goods sold and beginning and ending inventories are provided from corporate annual reports (in millions) for these three companies: a. Determine the inventory turnover ratio for all three companies. Round all calculations to one decimal place. b. Determine the number of days’ sales in inventory for all three companies. Use 365 days and round all calculations to one decimal place. c. Interpret these results based on each company’s merchandising concept.

BuyFindarrow_forward

Corporate Financial Accounting

15th Edition
Carl Warren + 1 other
Publisher: Cengage Learning
ISBN: 9781337398169
BuyFindarrow_forward

Corporate Financial Accounting

15th Edition
Carl Warren + 1 other
Publisher: Cengage Learning
ISBN: 9781337398169
Chapter 6, Problem 6.3MAD
Textbook Problem
348 views

Analyze and compare Costco, Wal-Mart, and Nordstrom

 The general merchandise retail industry has a number of segments represented by the following companies:

Company Name Merchandise Concept
Costco Wholesale Corporation (COST) Membership warehouse
Wal-Mart Stores, Inc. (WMT) Discount general merchandise
Nordstrom, Inc. (JWN) Fashion department store

For a recent war, the following cost of goods sold and beginning and ending inventories are provided from corporate annual reports (in millions) for these three companies:

Chapter 6, Problem 6.3MAD, Analyze and compare Costco, Wal-Mart, and Nordstrom The general merchandise retail industry has a , example  1

  1. a. Determine the inventory turnover ratio for all three companies. Round all calculations to one decimal place.
  2. b. Determine the number of days’ sales in inventory for all three companies. Use 365 days and round all calculations to one decimal place.
  3. c. Chapter 6, Problem 6.3MAD, Analyze and compare Costco, Wal-Mart, and Nordstrom The general merchandise retail industry has a , example  2 Interpret these results based on each company’s merchandising concept.

(a)

To determine

Inventory turnover ratio: Inventory turnover ratio is used to determine the number of times inventory used or sold during the particular accounting period. The formula to calculate the inventory turnover ratio is as follows:

Inventory turnover=Cost of goods soldAverage inventory

To determine: the inventory turnover for Company C, Company W and Company N

Explanation of Solution

The inventory turnover ratio for Company C is calculated as follows:

Inventory turnover=Cost of goods soldAverage inventory=$102,9018,938.5(1)=11.5 Times

Working notes:

The average inventory is calculated as follows:

Average inventory=(Inventory, beginning of the year + Inventory, end of the year)2=(8,908+8,969)2=8,938.5 (1)

The inventory turnover ratio for Company W is calculated as follows:

Inventory turnover=Cost of goods soldAverage inventory=$360,98444,805(2)=8 Times

Working notes:

The average inventory is calculated as follows:

Average�

(b)

To determine

Days’ sales in inventory: Days’ sales in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them. The formula to calculate the days’ sales in inventory ratio is as follows:

Days' sales in inventory=Days in accounting periodInventory turnover

To determine: the Days’ sales in inventory ratio for Company C, Company W and Company N.

(c)

To determine

Inventory turnover ratio: Inventory turnover ratio is used to determine the number of times inventory used or sold during the particular accounting period. The formula to calculate the inventory turnover ratio is as follows:

Inventory turnover=Cost of goods soldAverage inventory

Days’ sales in inventory: Days’ sales in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them. The formula to calculate the days’ sales in inventory ratio is as follows:

Days' sales in inventory=Days in accounting periodInventory turnover

To interpret: the above calculated ratios.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Chapter 6 Solutions

Corporate Financial Accounting
Show all chapter solutions
add
Ch. 6 - Cost flow methods The following three identical...Ch. 6 - Perpetual inventory using FIFO Beginning...Ch. 6 - Perpetual inventory using LIFO Beginning...Ch. 6 - Perpetual inventory using weighted average...Ch. 6 - Periodic inventory using FIFO, LIFO, and weighted...Ch. 6 - Lower-of-cost-or-market method On the basis of the...Ch. 6 - Effect of inventory errors During the taking of...Ch. 6 - Effect of inventory errors During the taking of...Ch. 6 - Control of inventories Triple Creek Hardware Store...Ch. 6 - Control of inventories Hardcase Luggage Shop is a...Ch. 6 - Perpetual inventory using FIFO Beginning...Ch. 6 - Perpetual inventory using LIFO Assume that the...Ch. 6 - Perpetual inventory using LIFO Beginning...Ch. 6 - Perpetual inventory using FIFO Assume that the...Ch. 6 - FIFO and UFO costs under perpetual inventory...Ch. 6 - Weighted average cost flow method under perpetual...Ch. 6 - Weighted average cost flow method under perpetual...Ch. 6 - Perpetual inventory using FIFO Assume that the...Ch. 6 - Perpetual inventory using LIFO Assume that the...Ch. 6 - Periodic inventory by three methods The units of...Ch. 6 - Periodic inventory by three methods; cost of goods...Ch. 6 - Comparing inventory methods Assume that a firm...Ch. 6 - Lower-of-cost-or-market inventory On the basis of...Ch. 6 - Inventory on the balance sheet Based on the data...Ch. 6 - Effect of errors n physical inventory Madison...Ch. 6 - Effect of errors in physical inventory Fonda...Ch. 6 - Error in inventory During 20Y5, the accountant...Ch. 6 - Retail method A business using the retail method...Ch. 6 - Retail method A business using the retail method...Ch. 6 - Retail method A business using the retail method...Ch. 6 - Retail method On the basis of the following data,...Ch. 6 - Gross profit method The inventory was destroyed by...Ch. 6 - Gross profit method Based on the following data,...Ch. 6 - Gross profit method Based on the following data,...Ch. 6 - FIFO perpetual inventory The beginning inventory...Ch. 6 - LIFO perpetual inventory The beginning inventory...Ch. 6 - Weighted average cost method with perpetual...Ch. 6 - Periodic inventory by three methods The beginning...Ch. 6 - Periodic inventory by three methods Dymac...Ch. 6 - Lower-of-cost-or-market inventory Data on the...Ch. 6 - Retail method; gross profit method Selected data...Ch. 6 - FIFO perpetual inventory The beginning inventory...Ch. 6 - LIFO perpetual inventory The beginning inventory...Ch. 6 - Weighted average cost method with perpetual...Ch. 6 - Periodic inventory by three methods The beginning...Ch. 6 - Periodic inventory by three methods Pappas...Ch. 6 - Lower-of-cost-or-market inventory Data on the...Ch. 6 - Retail method; gross profit method Selected data...Ch. 6 - Analyze and compareAmazon.com to Target...Ch. 6 - Analyze and compare Darden Restaurants to Panera...Ch. 6 - Analyze and compare Costco, Wal-Mart, and...Ch. 6 - Analyze and compare Monster Beverage and...Ch. 6 - Ethics in Action Sizemo Elektroniks sells...Ch. 6 - Ethics in Action Anstead Co. is experiencing a...Ch. 6 - Communication Golden Eagle Company began...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions add
Identify the major considerations when organizing a business.

Foundations of Business (MindTap Course List)

List the 10 steps in the accounting cycle.

College Accounting, Chapters 1-27

In what ways is economics a science?

Essentials of Economics (MindTap Course List)

What is a digital envelope?

Accounting Information Systems

Why do options typically sell at prices higher than their exercise values?

Fundamentals of Financial Management (MindTap Course List)

Why is the NFV of a relatively long-term project (one for which a high percentage of its cash flows occurs in t...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)