Nordstrom, Inc. operates department stores in numerous states. Suppose selected financial statement data (in millions) for 2022 are as follows. End of Year Beginning of Year Cash and cash equivalents $ 795 $ 72 Accounts receivable (net) 2,035 1,942 Inventory 898 900 Other current assets 326 303 Total current assets $4,054 $3,217 Total current liabilities $2,014 $1,601 For the year, net credit sales were $8,258 million, cost of goods sold was $5,328 million, and net cash provided by operating activities was $1,251 million. Compute the current ratio, accounts receivable turnover, average collection period, inventory turnover, and days in inventory at the end of the current year. (Round current ratio to 2 decimal places, e.g. 1.83 and all other answers to 1 decimal place, e.g. 1.8. Use 365 days for calculation.)

Respuesta :

The current ratio is 2.01 times, accounts receivable turnover is 4.15, average collection period is 87.95 days, inventory turnover is 5.93, and days in inventory at the end of the current year is 61.55 days.

Current ratio, accounts receivable and average collection period

1. Current ratio:

Current ratio = Current assets / Current liabilities

Current ratio= $4,054 ÷ $2,014

Current ratio= 2.01

2. Accounts receivable ratio:

Accounts receivable turnover= Net Sales / Average Accounts Receivable

Accounts receivable turnover =8,258/ [(2,035+ 1,942)/2]

Accounts receivable turnover =8,258/1,988.5

Accounts receivable turnover =4.15

3. Average collection:

Average collection period = 365 / Accounts Receivable Turnover ratio

Average collection period=365/4.15

Average collection period=87.95 days

4. Inventory turnover:

Inventory turnover ratio = Cost of Goods Sold / Average Inventory

Inventory turnover ratio=$5,328/(898+900)/2

Inventory turnover ratio=5,328/899

Inventory turnover ratio=5.93

5. Day in inventory:

Day in inventory = 365 / Inventory turnover ratio

Day in inventory=365/5.93

Day in inventory=61.55 days

Therefore the current ratio is 2.01 times, accounts receivable turnover is 4.15, average collection period is 87.95 days, inventory turnover is 5.93, and days in inventory at the end of the current year is 61.55 days.

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