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    Nordstrom, Inc: Compute the four liquidity ratios and compare to the industry

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    E15-5 Nordstrom, Inc. operates department stores in numerous states. Selected financial statement
    data for the year ending January 31, 2002, are as follows.

    Balance Sheet (partial)
    (in millions) End-of-Year Beginning-of-Year
    Cash and cash equivalents $ 331 $ 25
    Receivables (less allowance of $23 and $17) 699 722
    Merchandise inventory 888 946
    Prepaid expenses 37 29
    Other current assets 102 91
    Total current assets $2,057 $1,813
    Total current liabilities $ 950 $ 951

    For the year, net sales were $5,634, and cost of goods sold was $3,766.

    (a) Compute the four liquidity ratios at the end of the current year.
    (b) Using the data in the chapter, compare Nordstrom's liquidity with (1) that of Sears, Roebuck
    and Co., and (2) the industry averages for department stores

    Financial Accounting, 5th edition
    P. Kimmel, J. Weygandt, and D. Kieso
    Wiley, 2005
    Hoboken, NJ

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    Nordstrom, Inc.
    Balance Sheet (Partial)
    End-of-Year Beginning-of-Year
    Cash and Cash Equivalents $331 $25
    Receivables (Less Allowances of $23 and $17) $699 $722
    Merchandise Inventory $888 $946
    Prepaid Expenses $37 $29
    Other Current Assets $102 $91
    Total Current Assets $2,057 ...

    Solution Summary

    The solution computes the four liquidity ratios and then presents two paragraphs of analysis.