Question

Table 13.5 Working Capital Ratios across Retail Building Supplies Firms Noncash Working Capital Noncash Working Capital as % of Revenues Sales Company Name Building Materials $729.00 197.00 98.00 971.00 1,262.00 398.00 24,156.00 1,879.00 1,137.00 2,334.00 425.00 16.44 20.65 25.06 15.C7 18.25 31.16 11.59 25.50 25.31 11.23 13.77 19.51 $119.83 40.68 24.66 152.19 230.28 124.01 Catalina Lighting Continental Materials Corp. Eagle Hardware Emco Limited Fastenal Co. The Home Depot Hughes Supply Lowe's Cos. Westburne Inc. Wolohan Lumber Average Source: Value Line. 2,800.00 479.1501 287.739967 262.1601 58.46

QUESTIONS

1) FIND OUT WHETHER EACH COMPANY IS OVER INVESTED OR UNDER INVESTED

2) WHAT IS THE STATUS OF EACH COMPANY IN TERMS OF WORKING CAPITAL INVESTMENT COMPARED TO INDUSTRY AVERAGE

Answer 1

a)	Company Name	Non-Cash WC as % of Revenues	Overinvested or Underinvested
	Building Materials	16.44	Underinvested
	Catalina Lighting	20.65	Overinvested
	Continental Materials Corp.	25.06	Overinvested
	Eagle Hardware	15.67	Underinvested
	Emco Limited	18.25	Underinvested
	Fastenal Co.	31.16	Overinvested
	The Home Depot	11.59	Underinvested
	Huges Supply	25.50	Overinvested
	Lowe's Cos.	25.31	Overinvested
	Westburne Inc.	11.23	Underinvested
	Wolohan Lumber	13.77	Underinvested
	Average	19.51
b)	Company Name	Non-Cash WC as % of Revenues	% Overinvested or (Underinvested)
	Building Materials	16.44	-3.07
	Catalina Lighting	20.65	1.14
	Continental Materials Corp.	25.06	5.55
	Eagle Hardware	15.67	-3.84
	Emco Limited	18.25	-1.26
	Fastenal Co.	31.16	11.65
	The Home Depot	11.59	-7.92
	Huges Supply	25.50	5.99
	Lowe's Cos.	25.31	5.80
	Westburne Inc.	11.23	-8.28
	Wolohan Lumber	13.77	-5.74
	Average	19.51
	Out of the above 11 companies 5 are overinvested and 6 are underinvested.
	Fastenal Co. has the highest overinvestment and Westburne Inc has the
	lowest underinvestment.