Nordstrom, Inc. operates department stores in numerous states. Selecte

QUESTION

Nordstrom, Inc. operates department stores in numerous states. Selected financial statement data for the year ending February 2, 2008, are shown on the next page.For the year, net sales were $8,828, and cost of goods sold was $5,526 (in millions).Instructions(a) Compute the four liquidity ratios at the end of the year.(b) Using the data in the chapter, compare Nordstroms liquidity with (1) That of J.C. Penney Company, and(2) The industry averages for departmentstores.
a) Current ratio=(Current assets / Current Liabilities) = 3361 / 1635 = 2.06 Acid test ratio=(Current assets-inventory-prepaid expenses) / (Current Liabilities) = (3361-956-78)/1635 = 1.42 = Receivable turnover=Sales/ AccountsReceivable =8828/1788 = 4.94 = Inventory turnover=COGS/Average Inventory =5526/(956+997)*0.5 = 5.66 b) Ratios for JC penny in 2008 Current ratio=2.02 Acid test ratio=0.87 Receivable

urnover=57.32 Inventory Turnover=3.46 Here is the table to compare Nordstrom, JC Penny and Other Retailers Ratio Nordstrom J.C. Penney Industry Current 2.1 2 1.06 Acid-test 1.42 0.87 0.29 Receivables turnover 4.94 57.0 28.2 Inventory turnover 5.7 3.5 7

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