Problem-14: Financial Statement Analysis

Suppose Nordstrom, Inc, which operates department stores in numerous states, has the following selected financial statement data for a recent year.

For the year, net sales were $8,258 and cost of goods sold was $5,328 (in millions).

Instructions

1. Compute the four liquidity ratios at the end of the year.
2. Compare Nordstrom's liquidity with (1) Mac's Inc., and (2) the industry averages for department stores as below information
   

Solution

Nordstrom is better than Mac's Inc. for Current and Acid-Test Ratio, significantly below in Accounts receivable turnover, and much better for the inventory turnover

Nordstrom is better than Industry Average for Current and Acid-Test Ratio, significantly below in Accounts receivable turnover, and higher for the inventory turnover