Textbook Problem

Inventory turnover and number of days' sales in inventory

Kroger, Safeway Inc. , and Whole Foods 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 information:

The cost of goods sold for each company was:

a. Determine the number of days’ sales in inventory (use 365 days and round to the nearest day) and the inventory turnover (round to one decimal place) for the three companies.

b. Interpret your results in p art (a).

c. If Kroger had Whole Foods’ number of days’ sales in inventory, how much additional cash flow (rounded to nearest million) would have been generated from the smaller inventory relative to its actual average inventory position?