Nordstrom, Inc. operates department stores in numerous states. Selected financial statement data (in millions of dollars) for the year ended January 31, 2004, are as follows.
End of Year Beginning of Year
Cash and cash equivalents $ 361 $ 340
Receivables (net) 646 667
Merchandise inventory 917 902
Other current assets 648 616
Total current assets $2,572 $2,525
Total current liabilities $1,341 $1,123
For the year, net sales were $7,131,000 and cost of goods sold was $4,559,000.
(a) Compute working capital and the current ratio at the beginning of the year and at the end of the current year.
(b) Did Nordstrom's liquidity improve or worsen during the year?
Please show all work.
Current Assets 2572 2525
Current Liabilities 1341 1123
Working Capital 1231 1402
Current Ratio 1.92 2.25
Working Capital=Current Assets-Current ...
The solution determines Nordstrom, Inc financial statement data for the years end. The working capital is determined in order to find if the liquidity improved or worsen during the year.