Business Applications Case Performing ratio analysis using real-world data
Safeway Inc., operated 1,739 stores as of January 3, 2009. The following data were taken from the company’s annual report. All dollar amounts are in thousands.
| Fiscal Years Ending | |
| January 3, 2009 | December 29, 2007 |
Revenue | $44,104,000 | $42,286,000 |
Cost of goods sold | 31,589,200 | 30,133,100 |
Net income | 965,300 | (888,400) |
Merchandise inventory | 2,591,400 | 2,797,800 |
Required
a. Compute Safeway’s inventory turnover ratio for 2008 and 2007.
b. Compute Safeway’s average days to sell inventory for 2008 and 2007.
c. Based on your computations in Requirements a and b, did Safeway’s inventory management get better or worse from 2007 to 2008?
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