Question

 

Calculate the following ratios for the most recent two years and comment on the results of your ratio analysis.

How do the results for your company compare to industry averages?

a. Current ratio

b. Inventory turnover

c. Asset turnover

d. Debt to assets

Kroger 10K: http://www.snl.com/Cache/c392874811.html

Answer 1

a. Current ratio:

JAN 2017

Total Current assests of Kroger -10K = 10,340 $

Total Current Liabilities of Kroger -10K = 12,860 $

Current ratio = Total current assests / Total current liabilities

= 10,340/12,860

= 0.8040 $

FEB 2018

Total Current assests of Kroger -10K = 11,117 $

Total Current Liabilities of Kroger -10K = 14,197 $

Current ratio = Total current assests / Total current liabilities

= 11,117 / 14,197

= 0.783 $

b. Inventory Turnover

FEB 2018

Inventory turnover = Cost of goods sold / Average Inventory

Inventory begining = 7,852+(1,291) = 6,561 $

Inventory at the end =  7,781+(1,248) = 6,533 $

Average Inventory = 6,561+ 6,533 / 2 =6,547 $

Cost of goods sold = 95,662 + 21,568 = 1,17,230 $

Inventory turnover = 1,17,230 $ / 6,547 $ = 17.906 $

JAN 2017

Inventory turnover = Cost of goods sold / Average Inventory

Inventoryat the end    = 6,561 $

Inventory at the begining = Sales + Closing Inventory - Purchases - Operating Profit

= 115337 + 6,561 - {89502 + 19178} - {3436 + 2340 + 881}

= 6,561

Cost of goods sold = 89,502 + 19178 = 1,08,860

Average Inventory = 6,561+ 6,561 / 2 =6,561 $

Inventory turnover = 1,08860 $ / 6,561 $ = 16.6 $

c. Asset turnover

FEB 2018

Asset Turn over = Revenue (Sales) / Net Assests

  Revenue (Sales) = 122,662

Net Assests = Total assests - total liabilities

= 37197 - 30292 = 6905 $

Asset Turn over = 122662 / 6905 = 17.76 $

JAN 2017

Asset Turn over = Revenue (Sales) / Net Assests

  Revenue (Sales) = 115337

Net Assests = Total assests - total liabilities

= 36505 - 29795 = 6710 $

Asset Turn over = 115337 / 6710 = 17.189 $

d. Debt to assets

FEB 2018

Debt to assets = Short term liabilities + Long term liabilities / Total Assets

Short term liabilities + Long term liabilities = 14197+ 16095 = 30292

Total Assets = 37197

Debt to assets = 30292 / 37197 = 0.814 $

JAN 2017

Debt to assets = Short term liabilities + Long term liabilities / Total Assets

  Short term liabilities + Long term liabilities = 12860+ 16935 = 29795

Total Assets = 36505

Debt to assets = 29795 / 36505 = 0.8162 $

Comparisions

FEB 2018 JAN 2017

Current ratio: 0.783 $ 0.804 $

Inventory Turnover      17.906 $ 16.60 $

Asset turnover 17.76 $ 17.189 $

Debt to assets    0.814 $ 0.8162 $

Current ratio and Debt to assests ratiois decreased from JAN 2017 TO FEB 2018, where as inventory turn over ratio and asset turn over ratio is increased from JAN 2017 TO FEB 2018.