Nordstrom, Inc. operates department stores in numerous states. Selected financia

Question

Nordstrom, Inc. operates department stores in numerous states. Selected financial statement data for the year ending January 30, 2010, are shown below. Nordstrom, Inc. Balance Sheet (partial) (in millions) End-of-Year Beginning-of-Year Cash and cash equivalents $ 795 $ 72 Accounts receivable (net) 2,035 1,942 Merchandise inventory 898 900 Prepaid expenses 88 93 Other current assets 238 210 Total current assets $4,054 $3,217 Total current liabilities $2,014 $1,601 For the year, net sales were $8,258 and cost of goods sold was $5,328 (in millions). Compute the four liquidity ratios at the end of the year. (Round all answers to 1 decimal place, e.g. 1.6 .) Current ratio :1 Acid-test ratio :1 Receivables turnover times Inventory turnover times

Explanation / Answer

CURRENT RATIO = 4054/2014 = 2.0129

aCID TEST RATIO = (795 + 2035)/2014 = 1.405

RECEIVABLES TURNOVER = 8258/2035 = 4.05799

iNVENTORY TURNOVER = 5328/898 = 5.933   

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