Question - 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:
| |
Merchandise Inventory |
| |
End of Year (in millions) |
Beginning of Year (in millions) |
| Kroger |
$5,114 |
$4,966 |
| Safeway |
2,470 |
2,623 |
| Whole Foods |
374 |
337 |
The cost of goods sold for each company was:
| |
Cost of Goods Sold (in millions) |
| Kroger |
$71,494 |
| Safeway |
31,837 |
| Whole Foods |
11,699 |
a. Determine the number of days' sales in inventory (use 365 days and round to the nearest day) and the inventory turnover for the three companies. Round all interim calculations to one decimal place. For number of days' sales in inventory, round final answers to the nearest day, and for inventory turnover, round to one decimal place.
b. If Kroger had Whole Foods' number of days' sales in inventory, how much additional cash flow would have been generated from the smaller inventory relative to its actual average inventory position? Round interim calculations to one decimal place and your final answer to the nearest million.