Contents
Problem 3-13
Problem 3-15
Problem 3-17
Problem 3-20
Problem 3-24

Problem 3-13
Foot Locker
2016
2015
2014
Cost of goods sold
$4,907
$4,777
$4,372
Inventory
1,285
1,250
1,220
Finish Line
Cost of goods sold
$1,306
$1,237
$1,123
Inventory
377
343
304
DSW
Cost of goods sold
$1,852
$1,741
$1,629
Inventory
484
451
398
Inventory management.
Three companies that compete in the footwear m
shows inventory levels and cost of goods sold for each company for the 20
ratio for each company in each year and summarize your findings. All valu

Inventory turnover ratio
3.8
3.9
4.1

The first thing to notice is that all three companies have turnover ratios
inventory a little less than 4 times per year.
That is a typical inventory
firms dramatically change their inventories with the seasons.
Over the last three years, Foot Locker has either increased its inventory
turnover ratios decline slightly in each year. Unless those companies are
products, specifically a mix that one would expect to sell less frequently
On a positive note for DSW, its turnover ratio is higher than or equal to

market are Foot Locker, Finish Line, and DSW. The table below
016, 2015, and 2014 fiscal years. Calculate the inventory turnover
ues are in $ millions.

that are fairly similar, and all of three companies turn over there
turnover for a retailer that specializes in clothing because these
y or held it steady.
Both Finish Line and DSW have seen their
re deliberately pursuing a strategy of selling a different mix of
y, then the decline in inventory turnover ratios is a worrying trend.
o its competitors every year.

Problem 3-15
Procter & Gamble
Colgate-Palmolive
Sales
$65,231
$15,195
Cost of goods sold
32,967
6,072
Receivables
4,729
1,411
Inventory
4,787
1,171
Total current assets
25,572
4,338
Total current liabilities
28,891
3,305
Total assets
117,033
12,123
a.
b.
Which company is in the position of having greatest liquidity?
c.
d.
Quick ratio
0.72
0.96
0.51
Interpreting liquidity and activity ratios.
The table below shows key financial data
market: Procter & Gamble, Colgate-Palmolive, and Clorox. All dollar values are in th
Calculate each of the following ratios for all three companies: current ratio, quick
asset turnover.
Would you say that the three companies exhibit similar performance or quite diffe
do you think that might be?
Which company has the most rapid inventory turnover? Which company appears t
your answers to those questions a little surprising? If a company is best at inventor
think that means?
Solution
a.
Clorox
Current ratio
0.89
1.31
0.76
Calculate each of the following ratios for all three companies: current ratio, quick
asset turnover.
Procter &
Gamble
Colgate-
Palmolive

b.
Which company is in the position of having greatest liquidity?