Question

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Analyze and compare Costco, Wal-Mart, and Nordstrom The general merchandise retail industry has a number of segments represented by the following companies: Company Name Merchandise Concept Costco Wholesale Corporation (COST) Membership warehouse Wal-Mart Stores, Inc. (WMT) Discount general merchandise Nordstrom, Inc. (JWN) Fashion department store For a recent year, the following cost of goods sold and beginning and ending inventories are provided from corporate annual reports in millions) for these three companies: Costco Wal-Mart Nordstrom Cost of goods sold $102,901 $360,984 $9,168 Inventories: Beginning of year 8,908 45,141 1,733 End of year 8,969 4 4,469 1,945 a. Determine the inventory tumover ratio for all three companies. Round all calculations to one decimal place. Inventory Turnover Costco 11.5 8.1 ✓ Wal-Mart Nordstrom 7.0 b. Determine the number of days' sales in inventory for all three companies. Assume a 365-day year. If required, round all computations to one decimal place and use in subsequent calculations. Round final answers to one decimal place. Number of Days' Sales in Inventory 31.7 days 45.3 days 53.7 X days Wal-Mart Nordstrom

Answer 1

For Nordstrom

Average inventory = ( Beginning inventory + Ending inventory)/2

= (1,733+1,945)/2

= $1,839 million

Inventory Turnover = Cost of goods sold/Average inventory

= 9,168/1,839

= 5

b)

Days sales in inventory = 365/Inventory turnover

= 365/5

= 73 days

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