Question

Neiman Marcus Group is one of the largest luxury fashion retailers in the world. Kohls Corporation sells moderately priced private and national branded products through more than 1100 department stores located throughout the United States. The current assets and current liabilities at the end of a recent year for both companies are as follows. (in millions)

                                                                Neiman Marcus ------------------Kohl's

Current assets:                                                                                                        

Cash                                                                          $ 197 ----------------$1407

Inventories                                                                 1,069 ----------------3,814

Other current assets                                                    144 ------------------477

    Total Current assets:                                           $ 1,410------------------ $ 5,698

Current Liabilities:

Accounts payable                                                   $ 375 ---------------------$ 1,511

Other current liabilities                                               482---------------------- 1,348

    Total Current Liabilities:                                    $ 857-------------------------- $ 2,859

A. Would an analysis of working capital between the two companies be meaningful?

B. Compute the quick ratio for both companies. Round to nearest decimal.

C. Interpret and explain the results.

Answer 1