Financial & Managerial Accounting
13th Edition
ISBN: 9781285866307
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 5, Problem 5.31EX
a.
To determine
Asset turnover ratio is used to determine the efficiency of the company towards use of asset towards generation of sales. The formula to calculate asset turnover is given below:
To Determine: The asset turnover for Company K.
b.
To determine
To Comment: Why Company T’s asset turnover is lower than Company K.
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Selected financial data of Target Corporation and Wal-Mart Stores, Inc. for a recent year are presented here (in millions).
Target Corporation Wal-Mart Stores, Inc.
Income Statement Data for Year
Net sales $61,471 $374,526
Cost of goods sold 41,895 286,515
Selling and administrative expenses 16,200 70,847
Interest expense 647 1,798
Other income (expense) 1,896 4,273
Income tax expense 1,776 6,908
Net income $2,849 $12,731
Balance Sheet Data (End of Year)
Current assets $18,906 $47,585
Noncurrent assets 25,654 115,929
Total assets $44,560 $163,514
Current liabilities $11,782 $58,454
Long-term debt 17,471 40,452
Total stockholders' equity 15,307 64,608
Total liabilities and stockholders' equity $44,560 $163,514
Target Corporation Wal-Mart Stores, Inc.
Beginning-of-Year Balances
Total assets $37,349 $151,587
Total stockholders' equity 15,633 61,573
Current liabilities 11,117 52,148
Total liabilities 21,716 90,014
Other Data
Average net accounts receivable $7,124 $3,247
Average inventory…
Kroger Co., a national supermarket chain, reported the following data (in millions) in its
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Total revenue
$108,465
Total assets at end of year
30,556
Total assets at beginning of year
29,281
a. Compute the asset turnover. Round to two decimal places.
b.
Tiffany & Co. is a large North American retailer of jewelry with an asset
turnover of 0.86. Why would Tiffany's asset turnover be lower than that of Kroger?
Nordstrom, Inc. operates department stores in numerous states. Suppose selected financial statement data (in millions of dollars) for a recent year follow.
End of Year
Beginning of Year
Cash and cash equivalents
$ 72
$ 358
Receivables (net)
1,942
1,788
Merchandise inventory
900
956
Other current assets
303
259
Total current assets
$3,217
$3,361
Total current liabilities
$1,601
$1,635
Compute working capital and the current ratio at the beginning of the year and at the end of the year. (Round current ratio to 2 decimal places, e.g. 15.25.)
Beginning of Year
End of Year
Working capital
$
enter a dollar amount
$
enter a dollar amount
Current ratio
enter current ratio rounded to 2 decimal places
:1
enter current ratio rounded to 2 decimal places
:1
Chapter 5 Solutions
Financial & Managerial Accounting
Ch. 5 - Prob. 1DQCh. 5 - Prob. 2DQCh. 5 - The credit period during which the buyer of...Ch. 5 - What is the meaning of (A) 1/15, n/60; (B) n/30;...Ch. 5 - How are sales to customers using .MasterCard and...Ch. 5 - Prob. 6DQCh. 5 - Prob. 7DQCh. 5 - Name three accounts that would normally appear in...Ch. 5 - Audio Outfitter Inc., which uses a perpetual...Ch. 5 - Prob. 10DQ
Ch. 5 - Prob. 5.1APECh. 5 - Gross profit During the current year, merchandise...Ch. 5 - Prob. 5.2APECh. 5 - Purchases transactions Hoffman Company purchased...Ch. 5 - Prob. 5.3APECh. 5 - Prob. 5.3BPECh. 5 - Freight terms Determine the amount to be paid in...Ch. 5 - Freight terms Determine the amount to be paid in...Ch. 5 - Prob. 5.5APECh. 5 - Transactions for buyer and seller Shore Co. sold...Ch. 5 - Prob. 5.6APECh. 5 - Inventory shrinkage Hahn Flooring Company's...Ch. 5 - Ratio of safes to assets Financial statement data...Ch. 5 - Prob. 5.7BPECh. 5 - Determining gross profit During the current year,...Ch. 5 - Determining cost of merchandise sold For a recent...Ch. 5 - Purchase-related transactions The Stationery...Ch. 5 - Purchase-related transactions A retailer is...Ch. 5 - Prob. 5.5EXCh. 5 - Prob. 5.6EXCh. 5 - Prob. 5.7EXCh. 5 - Prob. 5.8EXCh. 5 - Prob. 5.9EXCh. 5 - Prob. 5.10EXCh. 5 - Sales-related transactions The debits and credits...Ch. 5 - Prob. 5.12EXCh. 5 - Determining amounts to be paid on invoices...Ch. 5 - Sales-related transactions Showcase Co., a...Ch. 5 - Purchase-related transactions Based on the data...Ch. 5 - Prob. 5.16EXCh. 5 - Prob. 5.17EXCh. 5 - Prob. 5.18EXCh. 5 - Normal balances of merchandise accounts What is...Ch. 5 - Prob. 5.20EXCh. 5 - Income statement for merchandiser The following...Ch. 5 - Determining amounts for items omitted from income...Ch. 5 - Multiple-step income statement On October 31,...Ch. 5 - Prob. 5.24EXCh. 5 - Prob. 5.25EXCh. 5 - Adjusting entry for merchandise inventory...Ch. 5 - Prob. 5.27EXCh. 5 - Prob. 5.28EXCh. 5 - Prob. 5.29EXCh. 5 - Prob. 5.30EXCh. 5 - Prob. 5.31EXCh. 5 - Prob. 5.32EXCh. 5 - Prob. 5.33EXCh. 5 - Prob. 5.34EXCh. 5 - Cost of merchandise sold and related items The...Ch. 5 - Cost of merchandise sold Based on the following...Ch. 5 - Prob. 5.37EXCh. 5 - Prob. 5.38EXCh. 5 - Prob. 5.39EXCh. 5 - Purchase-related transactions using perpetual...Ch. 5 - Sales-related transactions using perpetual...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Multiple step income statement and report form of...Ch. 5 - Prob. 5.6APRCh. 5 - Appendix Purchase-related transactions using...Ch. 5 - Appendix Sales-related and purchase-related...Ch. 5 - Appendix Sales-related and purchase-related...Ch. 5 - Periodic inventory accounts, multiple-step income...Ch. 5 - Purchase-related transactions using perpetual...Ch. 5 - Sales-related transactions using perpetual...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Multiple-step income statement and report form of...Ch. 5 - Prob. 5.6BPRCh. 5 - Appendix Purchase-related transactions using...Ch. 5 - Prob. 5.8BPRCh. 5 - Appendix Sales-related and purchase-related...Ch. 5 - Prob. 5.10BPRCh. 5 - Continuing problem Palisade Creek Co. is a...Ch. 5 - Prob. 5.1CPCh. 5 - Prob. 5.2CPCh. 5 - Prob. 5.3CPCh. 5 - Prob. 5.4CP
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