Kroger Case 3, accounting homework help

User Generated

zzbhfr18

Business Finance

Description

Attached is the sheet (assignment)

Unformatted Attachment Preview

Case 3: The Kroger Company The Kroger Company reported the following data in its annual report (in millions). January 31, 2015 February 1, 2014 February 2, 2013 Net sales $108,465 $98,375 $96,619 85,512 78,138 76,726 Year-end inventories using FIFO 6,933 6,801 6,244 Year-end inventories using LIFO 5,688 5,651 5,146 Cost of sales (using LIFO) Instructions (a)Compute Kroger’s inventory turnovers for fiscal years ending January 31, 2015, and February 1, 2014, using: (1)Cost of sales and LIFO inventory. (2)Cost of sales and FIFO inventory. (b)Some firms calculate inventory turnover using sales rather than cost of goods sold in the numerator. Calculate Kroger’s fiscal years ending January 31, 2015, and February 1, 2014, turnover, using: (1)Sales and LIFO inventory. (2)Sales and FIFO inventory. (c)State which method you would choose to evaluate Kroger’s performance. Justify your choice.
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Attached.

(a)Compute Kroger’s inventory turnovers for fiscal years ending January 31, 2015, and
February 1, 2014, using:
(1)Cost of sales and LIFO inventory.
Using the information provided above, and substituting the values of sales in the years 2015 and
2014 respectively in the formula for turnovers we obtain;
𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑓𝑜𝑟 𝑗𝑎𝑛 31, 2015 =

𝑐𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑
85512
=
= 15.0338
𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
5688

= 15.0338 times

𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑓𝑜𝑟 𝑓𝑒𝑏𝑟𝑢𝑎𝑟𝑦 1, 2014 =

𝑐𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑 78138
=
= 13.8272
𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
5651

= 13.8272 times
(2)Cost of sales and FIFO inventory
𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑓𝑜𝑟 𝑗𝑎𝑛 31, 2015 =

𝑐𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑
85512
=
= 12.3341
𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
6933

= 12.3341 times

𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑓𝑜𝑟 𝑓𝑒𝑏𝑟𝑢𝑎𝑟𝑦 1,

2014 =

𝑛𝑒�...


Anonymous
Just the thing I needed, saved me a lot of time.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Related Tags