Q1) The Kroger Company is one of the world's largest supermarket chains. These selected items were adapted from a recent Kroger balance sheet. (Dollar amounts are in millions)
| Cash (including deposit-in-transit) |
$918
|
Receivables
|
786
|
Merchandise inventories
|
4,855
|
Other current assets
|
555
|
Property, plant and equipment
|
12,498
|
Retained earnings
|
6,480
|
Total current liabilities
|
8,689
|
Questions:
a. Using information above, calculate amounts of Kroger's total current assets and total quick assets.
b. Calculate company's (1) current ratio, (2) quick ratio, and (3) working capital.(Round to one decimal place.)
c. From these calculations, are you able to conclude whether Kroger is good credit risk for short-term creditors or on the brink of bankruptcy? Explain.
d. Is there anything unusual about operating cycle of supermarkets which would make you think that they would generally have lower current ratios than, say, large department stores?
e. What other kinds of information would you use in performing a more complete analysis of Kroger's liquidity?