Analyze and compare Costco, Wal-Mart, and Nordstrom
The general merchandise retail industry has a number of segments represented by the following companies:
|Company Name||Merchandise Concept|
|Costco Wholesale Corporation (COST)||Membership warehouse|
|Wal-Mart Stores, Inc. (WMT)||Discount general merchandise|
|Nordstrom, Inc. (JWN)||Fashion department store|
For a recent year, the following cost of goods sold and beginning and ending inventories are provided from corporate annual reports (in millions) for these three companies:
|Cost of goods sold||$102,901||$360,984||$9,168|
|Beginning of year||8,908||45,141||1,733|
|End of year||8,969||44,469||1,945|
- Determine the inventory turnover ratio for all three companies. Round all calculations to one decimal place.
- Determine the number of days’ sales in inventory for all three companies. Assume a 365-day year. If required, round all computations to one decimal place and use it in subsequent calculations. Round final answers to one decimal place.
|Number of Days’ Sales in Inventory|
- Based on the results, which of the following statements is INCORRECT with regard to each company’s merchandising concept?
- Costco holds only mass-appeal items that are sold quickly off the shelf.
- Wal-Mart has attractive pricing, but the inventory moves more slowly than would be the case at a club warehouse.
- Nordstrom’s inventory moves slowly but at a higher margin.
- Wal-Mart’s inventory moves very quickly at higher margins.
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