The balance sheet on page F-3 of the most recent annual report for Kohl's Corporation indicates that the dollar amount for Accounts Payable reported as of February 2, 2008 decreased as compared to the amount reported as of February 3, 2007. And Total Assets reported as of February 2, 2008 increased as compared to the amount reported as of February 3, 2007.
After you have reviewed the Management Analysis and Discussion, why do you think accounts payable decreased?
Why do you think total assets increased?
First, some data copied from the attached files:
1. Our primary sources of funds are cash flow provided by operations, short-term trade credit and our lines of credit. Short-term trade credit, in the form of extended payment terms for inventory purchases, represents a significant source of financing for merchandise inventories
2. The primary use of operating cash flow for 2007 was an increase in merchandise inventories of $275.0 million.
3. Merchandise inventories used cash of $275.0 million in 2007. The 10.8% increase in our ending inventory balance from year-end 2006 to 2007 was primarily due to the increase in the number of stores. On an average per store basis, merchandise inventories at year-end 2007 decreased 2.6% from year-end 2006, due to ...
The solution presents pertinent data copied from the annual report, followed by four paragraphs of explanations in response to the questions about decrease in accounts payable and increase in total assets.