Problem:
Nordstrom Inc. operates department stores in numerous states. Selected financial statement data for the year ending January 29, 2012, are as follows.
NORDSTROM, INC.
Balance Sheet (partial)
(in millions) End-of-Year // Beginning-of-Year
Cash and cash equivalents : $ 474 // $ 387
Receivables (net) : 678 // 670
Merchandise inventory : 1,050 // 944
Prepaid expenses : 75 // 66
Other current assets : 621 // 589
Total current assets : $2,898 // $2,656
Total current liabilities : $1,884 // $1,461
For the year, net sales were $8,133, and cost of goods sold was $4,578 (in millions).
Compute the four liquidity ratios at the end of the year:
Current ratio
Acid-test ratio
Receivables turnover
Inventory turnover
Using the data in the chapter, compare Nordstrom's liquidity with (1) that of J.C. Penney Company, and (2) the industry averages for department stores.
Current ratio
Nordstorm :1
J.C. Penny 2.02:1
Industry 1.06:1
Acid-test ratio
Nordstorm :1
J.C. Penny 0.87:1
Industry 0.29:1
Receivables turnover
Nordstorm :1
J.C. Penny 57.0:1
Industry 28.2:1
Inventory turnover
Nordstorm :1
J.C. Penny 3.5:1
Industry 7.0:1