Question

*Exercise 9-7 Nordstrom, Inc. operates department stores in numerous states. Suppose selected financial statement data (in millions) for 2017 are presented below. End of Year $ 795 2,035 Beginning of Year $ 72 1,942 Cash and cash equivalents Accounts receivable (net) Inventory Other current assets Total current assets 898 900 303 326 $4,054 $3,217 $1,601 Total current liabilities $2,014 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, accounts receivable turnover, average collection period, inventory turnover, and days in inventory at the end of the current year. (Round current ratio to 2 decimal places, e.g. 1.82 and all other answers to 1 decimal place, e.g. 1.8. Use 365 days for calculation.) Current ratio Accounts receivable turnover times Average collection period days Inventory turnover times Days in inventory days Question Altamnten of usad

Answer 1

1)	Current Ratio = Current Assets / Current Liabilities
	= $4054/2014
	=2.01 times
2)	Average Account Receivables = (beginning Account Receivables + ending Account Receivables)/2
	= ( $1942+2035)/2
	= $ 1988.5
	Account receivables turnover = sales / average account receivables
	= $8258/1988.5
	=4.2 times
3)	Average Collection Period = 365/ Account Receivables turnover ratio
	= 365 days /4.2
	=86.9 days
4)	Average Inventory = (beginning inventory + ending inventory)/2
	= ( $900+898)/2
	= $ 899
	Inventory Turnover Ratio = Cost of goods sold / average inventory
	= $5328/899
	=5.9 times
5)	Days sales in inventory = 365/ inventory turnover ratio
	= 365 days /5.9
	=61.9 days

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