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Kracker Corp., Foodstuff, Inc., and Winston Stores, Inc. are three grocery chains in the United States. Inventory management is an important aspect of the grocery retail business. Recent balance sheets for these three companies indicated the following merchandise inventory (in millions) information: Kracker Foodstuff Winston Corp. Inc. Stores Cost of merchandise sold $33,580.0 $34,675.0 $35,040.0 Inventory, beginning of 1,951.3 2,131.8 1,582.1 year Inventory, end of year 1,912.7 2,048.2 1,489.9 a. & b. Determine the inventory turnover and the number of days' sales in inventory (use 365 days and round to the nearest day) for the three companies. Round all interim calculations to one decimal place. For days' sales in inventory, round final answers to the nearest day, and for inventory turnover, round to one decimal place. Company names Inventory Turnover Days' Sales in Inventory Kracker 17.38 X 21.00 v days Foodstuff 16.59 X 22.00 v days Winston Stores 16.00 v days c. The inventory turnover ratios and days' sales in inventory are similar for Kracker and Foodstuff. Winston Stores has a higher v inventory turnover and a lower v days' sales in inventory than Kracker and Foodstuff. These results suggest that Kracker and Foodstuff are less v efficient than Winston Stores in managing inventory. d. If Kracker had Winston Stores' days' sales in inventory, how much additional cash flow would have been generated from the smaller inventory relative to its actual average inventory position? Round interim calculations to one decimal place and your final answer to the nearest million. 459.84 X million

Kracker Corp., Foodstuff, Inc., and Winston Stores, Inc. are three grocery chains in the United States. Inventory management is an important aspect of the grocery retail business. Recent balance sheets for these three companies indicated the following merchandise inventory (in millions) information: Kracker Foodstuff Winston Corp. Inc. Stores Cost of merchandise sold $33,580.0 $34,675.0 $35,040.0 Inventory, beginning of 1,951.3 2,131.8 1,582.1 year Inventory, end of year 1,912.7 2,048.2 1,489.9 a. & b. Determine the inventory turnover and the number of days' sales in inventory (use 365 days and round to the nearest day) for the three companies. Round all interim calculations to one decimal place. For days' sales in inventory, round final answers to the nearest day, and for inventory turnover, round to one decimal place. Company names Inventory Turnover Days' Sales in Inventory Kracker 17.38 X 21.00 v days Foodstuff 16.59 X 22.00 v days Winston Stores 16.00 v days c. The inventory turnover ratios and days' sales in inventory are similar for Kracker and Foodstuff. Winston Stores has a higher v inventory turnover and a lower v days' sales in inventory than Kracker and Foodstuff. These results suggest that Kracker and Foodstuff are less v efficient than Winston Stores in managing inventory. d. If Kracker had Winston Stores' days' sales in inventory, how much additional cash flow would have been generated from the smaller inventory relative to its actual average inventory position? Round interim calculations to one decimal place and your final answer to the nearest million. 459.84 X million

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Inventory Turnover and Days' Sales in Inventory** Kracker Corp., Foodstuff, Inc., and Winston Stores, Inc. are three grocery chains in the United States. Inventory management is crucial for the grocery retail business. Here are the recent balance sheet figures for these companies (in millions): | | Kracker Corp. | Foodstuff Inc. | Winston Stores | |--------------------------|---------------|----------------|----------------| | Cost of Merchandise Sold | $33,580.0 | $34,675.0 | $35,040.0 | | Inventory, Beginning | 1,951.3 | 2,131.8 | 1,582.1 | | Inventory, End | 1,912.7 | 2,048.2 | 1,489.9 | **Calculation Guide:** a. & b. Determine the inventory turnover and the number of days’ sales in inventory (using 365 days) for each company. Round interim calculations to one decimal place. Round final answers for days’ sales to the nearest day, and inventory turnover to one decimal place. **Results:** | Company Names | Inventory Turnover | Days' Sales in Inventory | |-----------------|--------------------|--------------------------| | Kracker | 17.38 | 21 days | | Foodstuff | 16.59 | 22 days | | Winston Stores | *Calculation needed | 16 days | **Analysis:** c. Inventory turnover ratios and days' sales in inventory are similar for Kracker and Foodstuff. Winston Stores has a higher inventory turnover and lower days' sales in inventory, indicating more efficient inventory management compared to Kracker and Foodstuff. d. To find how much additional cash flow Kracker could generate by matching Winston Stores’ days’ sales in inventory, round the interim calculations to one decimal and the answer to the nearest million. - **Calculated Additional Cash Flow:** \$459.84 million **Feedback:** - **Check My Work:** 1. Determine the average daily cost of goods sold by dividing the cost by 365. 2. Divide the average inventory by the average daily cost of goods sold. The average inventory is the beginning plus the ending inventories, divided by two.
Transcribed Image Text:**Inventory Turnover and Days' Sales in Inventory** Kracker Corp., Foodstuff, Inc., and Winston Stores, Inc. are three grocery chains in the United States. Inventory management is crucial for the grocery retail business. Here are the recent balance sheet figures for these companies (in millions): | | Kracker Corp. | Foodstuff Inc. | Winston Stores | |--------------------------|---------------|----------------|----------------| | Cost of Merchandise Sold | $33,580.0 | $34,675.0 | $35,040.0 | | Inventory, Beginning | 1,951.3 | 2,131.8 | 1,582.1 | | Inventory, End | 1,912.7 | 2,048.2 | 1,489.9 | **Calculation Guide:** a. & b. Determine the inventory turnover and the number of days’ sales in inventory (using 365 days) for each company. Round interim calculations to one decimal place. Round final answers for days’ sales to the nearest day, and inventory turnover to one decimal place. **Results:** | Company Names | Inventory Turnover | Days' Sales in Inventory | |-----------------|--------------------|--------------------------| | Kracker | 17.38 | 21 days | | Foodstuff | 16.59 | 22 days | | Winston Stores | *Calculation needed | 16 days | **Analysis:** c. Inventory turnover ratios and days' sales in inventory are similar for Kracker and Foodstuff. Winston Stores has a higher inventory turnover and lower days' sales in inventory, indicating more efficient inventory management compared to Kracker and Foodstuff. d. To find how much additional cash flow Kracker could generate by matching Winston Stores’ days’ sales in inventory, round the interim calculations to one decimal and the answer to the nearest million. - **Calculated Additional Cash Flow:** \$459.84 million **Feedback:** - **Check My Work:** 1. Determine the average daily cost of goods sold by dividing the cost by 365. 2. Divide the average inventory by the average daily cost of goods sold. The average inventory is the beginning plus the ending inventories, divided by two.
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