Question

Comparing Profitability and Turnover Ratios for Retail Companies Selected financial statement data for Best Buy Co., Inc., The Kroger Co., Nordstrom, Inc., Office Depot, Inc., and Walgreens Boots Alliance, Inc. is presented in the following table: ($ millions) Best Buy Kroger Nordstrom Office Depot Walgreens Sales revenue $42,151.0 $122,662.0 $15,478.0 $10,240,0 $131,537.0 Cost of sales 32,275.0 95,662. 0 9 ,890.0 7,779.0 100,745.0 Interest expense 75.0 601.0 168.0 62.0 622.0 Net income 1,000.0 1,889.0 437.0 181.0 5,031.0 Average receivables 1,198.0 1,643.0 172.0 809.0 6,550.5 Average inventories 5,036.5 6,547.0 1,961.5 1,186.0 9,232.0 Average PP&E 2.357.0 21,043.5 3,918.0 663.0 13.776.5 Average total assets 13,452.5 36,851.0 15,974.0 5.931.5 67,066.5 Note: Assume a statutory tax rate of 25% for all companies. Required a. Compute return on assets (ROA) profit margin, (PM) and asset turnover (AT) for each company. Assume an income tax rate of 25%. Round your answers to one decimal place. ROA PM Best Buy 7.99 % 2.6 x 96 3.1 Kroger 6.76 X 96 2 x 96 3.3 Nordstrom 3.79 X 9 3 x 95 1 Office Depot 4.1 % 2 x % 7 1. Walgreen 8.43 x 96 4 x 95 2

Answer 1

(a) (b) 62 Working Sales Revenue Cost of Sales Interest Expenses (c) Net Income (d) Average receivable (e) Average Inventories (f) Average PP&E Average total Assets (h) Best Buy Kroger Nordstrom Office Depot Walgreens 42151 122622 15478 10240 131537 32275 95662 9890 7779 100745 75 601 168 622 1000 1643 172 809 5031 1198 1643 172 809 6550.5 5036.5 6547 1961.5 1186 9232 2357 21043.5 3918 663 13776.5 13452.5 36851 15974 5931.5 67066.5 1.9% ROA PM AT [d + (Cx 0.75 )] /h d/a a/h 7.9% 2.4% 3.1 5.7% 1.3% 3.3 1.1% 14.4% 7.9% 1.7 8.2% 3.8% 2.0 1.0 Formula: 1) ROA = 2) PM = 3) AT= [Net income + Interest expenses x (1-tax rate))] / Average Total Assets Net Income / Net Sales Net Sales / Average Total Assets