Problem
Mohamed Repair Specialists (MRS) is a leading retailer of home improvement products. It operates large warehouse-style stores. Despite declining sales and difficult economic conditions in 2013 and 2014, MRS continued to invest in new stores. The following table provides summary data for MRS.
Mohamed Repair Specialists
(amounts in millions except number of stores) 2013 2014
Number of stores 8,235 8,273
Sales revenues $88,349 $82,288
Inventory $21,131 $20,173
Capital expenditures, net $4,458 $747
Required
1. Use the preceding data for MRS to compute average revenues per store, capital spending per new store, and ending inventory per store in 2014.
2. Assume that MRS will add 100 new stores by the end of Year 1. Use the data from 2014 to project Year 1 sales revenues, capital spending, and ending inventory. Assume that each new store will be open for business for an average of one-half year in Year 1. For simplicity, assume that in Year 1, MRS's sales revenues will grow, but only because it will open new stores.