Chapter 14, Problem 14.5E

Suppose Nordstrom, Inc., which operates department stores in numerous states, has the following selected financial statement data for a recent year.

NORDSTROM, INC.

Balance Sheet (partial)

(in millions)	End-of-Year	Beginning-of-Year
Cash and cash equivalents	$ 795	$ 72
Accounts receivable (net)	2,035	1,942
Inventory	898	900
Prepaid expenses	88	93
Other current assets	238	210
Total current assets	$4,054	$3,217
Total current liabilities	$2,014	$1,601

For the year, net sales were $8,258 and cost of goods sold was $5,328 (in millions).

Instructions

(a) Compute the four liquidity ratios at the end of the year.

(b) Using the data in the chapter, compare Nordstrom’s liquidity with (1) that of Macy’s, Inc., and (2) the industry averages for department stores.