Question

E6-35. Evaluating Grocery Stores Using Efficiency Ratios

Below are data for three publicly traded grocery stores that range in size from local (Village Super Markets) to regional (Publix) to national (Kroger). Use the ratios below to answer the requirements. Assume

that the companies sell roughly the same mix of products and face about the same inventory costs.

Fiscal 2018 Publix Kroger Village Super Market

Gross profit margin %. . . . . . . . . . . . . . . . . . . 29.6% 21.7% 27.2%

Number of stores at year-end. . . . . . . . . . . . . 1,211 2,764 30

Sales ($ per square foot) . . . . . . . . . . . . . . . . $639 $677 $1,165

Sales per store ($ millions). . . . . . . . . . . . . . . $ 30 $ 44 $ 54

Average store size (thousand square feet). . . 47 65 46

COGS (per square foot) . . . . . . . . . . . . . . . . . $450 $530 $ 848

Days inventory outstanding . . . . . . . . . . . . . . 26.5 25.7 12.6

Required

a. On average, which company has the freshest food?

b. Which company is least efficient with its space?

c. Which company has the lowest prices?

d. Which company is busiest?

e. Which company has the smallest stores

Answer 1

Ratio	Publix	Kroger	Village Super Market
Ans a.
Days Inventory Outstanding	26.50	25.70	12.60
Village SuperMarket holds the inventory for
the least no of days .
So Village Super Market has the freshest
products.
Ans b
Sales $ per Sq feet	$             639.00	$       677.00	$         1,165.00
Publix has the least sales $ per Sq ft store space.
So Publix is least efficient with its spaces.
Ans c.
Gross Profit Margin %	29.60%	21.70%	27.20%
As the sales mix are same and the inventory
costs also the same, the company's have
similar COGS. So the company with least Gross
Margin will have the least sales price.
As Kroger has the lowest Gross Margin, Kroger
has the least Sales Price.
Ans d.
Sales Per Store ($ M)	$               30.00	$         44.00	$              54.00
As Village SuperMarket has the highest sales
per store and also highest sales $ per Sq fr,
Village SuperMarket is the busiest.
Ans e
Average Store Size('000 Sq Ft)	47	65	46
Village Super Market has the smallest
store size