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    Nordstrom's liquidity with (1) that of J.C. Penney Company

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    Nordstrom Inc. operates department stores in numerous states. Selected financial statement data for the year ending January 29, 2012, are as follows.
    NORDSTROM, INC.
    Balance Sheet (partial)
    (in millions) End-of-Year Beginning-of-Year
    Cash and cash equivalents $ 482 $ 369
    Receivables (net) 679 684
    Merchandise inventory 1,050 935
    Prepaid expenses 66 60
    Other current assets 613 586
    Total current assets $2,890 $2,634
    Total current liabilities $1,879 $1,449
    For the year, net sales were $8,178, and cost of goods sold was $4,612 (in millions
    Compute the four liquidity ratios at the end of the year. (Round ratios to 2 decimal place, e.g. 10.57:1 and turnovers to 1 decimal place, e.g. 10.5.)
    Current ratio :1

    Acid-test ratio :1

    Receivables turnover times

    Inventory turnover times

    Using the data in the chapter, compare Nordstrom's liquidity with (1) that of J.C. Penney Company, and (2) the industry averages for department stores. (Round ratios to 2 decimal place, e.g. 10.57:1 and turnovers to 1 decimal place, e.g. 10.5.)
    Ratio Nordstrom J. C. Penney Industry
    Current :1
    2.02:1 1.06:1
    Acid-test :1
    0.87:1 0.29:1
    Receivables turnover :1
    57.0:1 28.2:1
    Inventory turnover :1
    3.5:1 7.0:1
    Nordstrom is J.C. Penney for the current and acid-test ratios and the receivables turnover. Nordstrom is than J.C. Penney for inventory turnover.
    Nordstrom is than the industry average for the current and acid test ratio, but the industry average for receivables turnover and the inventory turnover ratios.

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    Nordstrom Inc. operates department stores in numerous states. Selected financial statement data for the year ending January 29, 2012, are as follows.
    NORDSTROM, INC.
    Balance Sheet (partial)
    (in millions) End-of-Year Beginning-of-Year
    Cash and cash equivalents $ 482 $ 369
    Receivables (net) 679 684
    Merchandise inventory 1,050 935
    Prepaid expenses 66 60
    Other current assets 613 586
    Total current assets $2,890 $2,634
    Total current liabilities $1,879 $1,449
    For the year, net sales were $8,178, and ...

    Solution Summary

    Solution discusses and helps in computing Nordstrom's liquidity with (1) that of J.C. Penney Company

    $2.19

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