Corporate Financial Accounting
14th Edition
ISBN: 9781305653535
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 10, Problem 10.4ADM
Cabela’s and Dicks Sporting Goods: Short-term liquidity analysis
Cabela’s Incorporated is a leading specialty retailer of outdoor sports merchandise. Dick’s Sporting Goods, Inc. is a leading full-line retailer of sporting equipment and apparel. The current assets and current liabilities of both companies are provided as follows from recent financial statements (in millions):
| Cabela’s | Dick’s | |
| Current assets: | ||
| Cash | $ 478 | $ 345 |
| 62 | 35 | |
| Credit card loans | 4,422 | — |
| Inventories | 760 | 1,096 |
| Other current assets | 216 | 120 |
| Total current assets | $5,938 | $1,596 |
| Current liabilities: | ||
| Accounts payable | $ 336 | $ 508 |
| Gift cards | 340 | — |
| Other current liabilities | 1,445 | 493 |
| Total current liabilities | $2,121 | $1,001 |
Cabela’s has a branded credit card that is the basis for its financial services business. “Credit card loans” in Cabela’s current assets represent the amounts due from Cabela’s CLUB® Visa credit card customers. The credit card loans represent 1,817,012 active accounts with an average balance of $2,167. The credit card holders have a median FICO score of 795, which denotes highly creditworthy customers. Cabela’s other current liabilities include, among other items, short-term funding to support credit card purchases from its CLUB members.
A. What do the “gift cards” listed under Cabela’s current liabilities represent?
B. Should the “credit card loans” be considered part of quick assets for Cabela’s computation of the quick ratio? Explain.
C. Compute the
D. Compute the quick ratio for Cabela’s and Dick’s Sporting Goods. (Round to one decimal place.)
E. Compare the two companies using the computations in (C) and (D).
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Carla Vista Co. has these comparative balance sheet data:
CARLA VISTA CO.Balance SheetsDecember 31
2022
2021
Cash
$ 16,140
$ 32,280
Accounts receivable (net)
75,320
64,560
Inventory
64,560
53,800
Plant assets (net)
215,200
193,680
$371,220
$344,320
Accounts payable
$ 53,800
$ 64,560
Mortgage payable (15%)
107,600
107,600
Common stock, $10 par
150,640
129,120
Retained earnings
59,180
43,040
$371,220
$344,320
Additional information for 2022:
1.
Net income was $32,500.
2.
Sales on account were $392,900. Sales returns and allowances amounted to $27,300.
3.
Cost of goods sold was $217,300.
4.
Net cash provided by operating activities was $57,200.
5.
Capital expenditures were $30,000, and cash dividends were $19,000.
Compute the following ratios at December 31, 2022. (Round current ratio and inventory turnover to 2 decimal…
Selected financial data regarding current assets and current liabilities for ACME Corporation and Wayne Enterprises, are as follows: ($ in millions) ACME Corporation Wayne Enterprises Current assets: Cash
and cash equivalents $519 $185 Current investments 7 461 Net receivables 618 106 Inventory 10, 645 7,609 Other current assets 1,251 155 Total current assets $13,040 $8,516 Current liabilities: Current
debt $7,621 $4,464 Accounts payable 1,707 961 Other current liabilities 1, 148 2,552 Total current liabilities $10,476 $7,977 Required: 1-a. Calculate the current ratio for ACME Corporation and Wayne
Enterprises. 1-b. Which company has the more favorable ratio? 2-a. Calculate the acid-test (quick) ratio for ACME Corporation and Wayne Enterprises. 2-b. Which company has the more favorable
ratio?
Selected financial data regarding current assets and current liabilities for ACME Corporation and Wayne Enterprises, are as follows: ACME Corporation Wayne EnterprisesCurrent assets:Cash and cash equivalents $ 2,494 $ 541Current investments 125Net receivables 1,395 217Inventory 10,710 8,600Other current assets 773 301Total current assets $15,372 $9,784Current liabilitiesCurrent debt $ 1,321 $ 47Accounts payable 8,871 5,327Other current liabilities 1,270 2,334Total current…
Chapter 10 Solutions
Corporate Financial Accounting
Ch. 10 - Does a discounted note payable provide credit...Ch. 10 - Employees are subject to taxes withheld from their...Ch. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - To match revenues and expenses properly, should...Ch. 10 - Prob. 7DQCh. 10 - Installment notes require equal periodic payments....Ch. 10 - When should the liability associated with a...Ch. 10 - Prob. 10DQ
Ch. 10 - Proceeds from notes payable On January 26, Nyree...Ch. 10 - Prob. 10.2BECh. 10 - Journalize period payroll The payroll register of...Ch. 10 - Prob. 10.4BECh. 10 - Prob. 10.5BECh. 10 - Journalizing installment notes On the first day of...Ch. 10 - Prob. 10.7BECh. 10 - Current liabilities Bon Nebo Co. sold 25,000...Ch. 10 - Entries for notes payable Bennett Enterprises...Ch. 10 - Evaluating alternative notes A borrower has two...Ch. 10 - Entries for notes payable A business issued a...Ch. 10 - Entries for discounted note payable A business...Ch. 10 - Fixed asset purchases with note On June 30,...Ch. 10 - Prob. 10.7EXCh. 10 - Calculate payroll An employee earns 44 per hour...Ch. 10 - Prob. 10.9EXCh. 10 - Summary payroll data In the following summary of...Ch. 10 - Payroll tax entries According to a summary of the...Ch. 10 - Payroll entries The payroll register for D. Salah...Ch. 10 - Prob. 10.13EXCh. 10 - Prob. 10.14EXCh. 10 - Prob. 10.15EXCh. 10 - Accrued vacation pay A business provides its...Ch. 10 - Prob. 10.17EXCh. 10 - Prob. 10.18EXCh. 10 - Entries for installment note transactions On the...Ch. 10 - Entries for installment note transactions On...Ch. 10 - Entries for installment note transactions On...Ch. 10 - Prob. 10.22EXCh. 10 - Prob. 10.23EXCh. 10 - Prob. 10.24EXCh. 10 - Liability transactions The following items were...Ch. 10 - Entries for payroll and payroll taxes The...Ch. 10 - Wage and tax statement data on employer FICA tax...Ch. 10 - Prob. 10.4APRCh. 10 - Payroll accounts and year-end entries The...Ch. 10 - Prob. 10.1BPRCh. 10 - Prob. 10.2BPRCh. 10 - Wage and tax statement data and employer FICA tax...Ch. 10 - Prob. 10.4BPRCh. 10 - Payroll accounts and year-end entries The...Ch. 10 - Prob. 3COPCh. 10 - Prob. 10.1ADMCh. 10 - Prob. 10.2ADMCh. 10 - Neiman Marcus and Kohls: Short-term liquidity...Ch. 10 - Cabelas and Dicks Sporting Goods: Short-term...Ch. 10 - Ethics in Action Tonya Latirno is a staff...Ch. 10 - Prob. 10.3TIF
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