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(Solution Download) Kroger, Albertson"s, Inc., and Safeway Inc. are the three largest grocery chains in the United...

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Kroger, Albertson?s, Inc., and Safeway Inc. are the three largest 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 information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise Inventory

 

 

 

 

 

End of Year

 

 

Beginning of Year

 

 

(in millions)

 

 

(in millions)

 

 

Albertson?s

 

 

$3,162

 

 

$3,104

 

 

Kroger

 

 

4,356

 

 

4,169

 

 

Safeway

 

 

2,741

 

 

2,642

 

 

The cost of goods sold for each company were:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

 

(in millions)

 

 

Albertson?s

 

 

$28,711

 

 

Kroger

 

 

42,140

 

 

Safeway

 

 

25,228

 

 

a. Determine the number of days? sales in inventory and inventory turnover for the three companies. Round to the nearest day and one decimal place.

 

b. Interpret your results in (a).

 

c. If Albertson?s had Kroger?s number of days? sales in inventory, how much additional cash flow would have been generated from the smaller inventory relative to its actual average inventory position?

 







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