Nordstrom, Inc. operates department stores in numerous states. Suppose selected

Question

Nordstrom, Inc. operates department stores in numerous states. Suppose selected financial statement data (in millions) for 2014 are presented below. 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, current cash debt coverage , accounts receivable turnover, average collection period, inventory turnover and days in inventory at the end of the current year. (Round all answers to 2 decimal places/ e.g. 1.83.)

Explanation / Answer

Current ratio = Current Assets / Current Liabilities

= $ 4054 / 2014 = 2.01:1

Current Cash debt coverage = Net cash provided by Operating activities / Average current liabilities

= $ 1251 / (2014+1601)/2

= .69 times

Accounts receivable turnover = net credit sales / Average accounts receivable

= $ 8258 / (2035+1942)/2

= 4.15 times

Average collection period = 365 days/ Accounts receivable turnover

= 365 / 4.15 = 87.95 days

Inventory turnover = Cost of goods sold / Average inventory

= $ 5328 / (898+900)/2

= 5.93 times

Days in inventory = 365 / Inventory turnover

= 365 / 5.93 = 61.55 days

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