Kroger In 2015 • Current ratio = Current assets/ Current liabilities = 8,911 / 11,403 = .78 • Debt ratio = Total liabilities / Total assets = 25,114 / 30,556 = .82 • Inventory turnover = COGS / Inventory = 85,512 / ((5688 + 5651)/2) = 15.08 In 2016 • Current ratio= 9,892 / 12,971 = .7626 • Debt ratio = 27,099 / 33,897 = .799 • Inventory turnover = 85,496 / ((6168 + 5688)/2) = 14.42 The current ratio measures the ability of a business to pay back their liabilities. Kroger’s current ratio for both years was under one, which shows that Kroger has more current liabilities than current assets. This could predict that Kroger is not in good financial health at this time. However, some of their competitors have current ratios under one too. The grocery store industry trends to have lower liquidity ratios, because they keep lower levels of current assets. Their ongoing sales help pay upcoming liabilities. Still, business owners and investors would be looking for a current ratio over one at least. …show more content…
Kroger has an inventory turnover ratio of about 15, which means their inventory is sold and replaced 15 times a year. A high inventory turnover ratio indicates strong sales, especially if profits are increasing too. Kroger’s competitors have inventory turnover ratios ranging from 10 to 34, so Kroger is right in the middle. It’s hard to compare companies with this ratio, because a high ratio doesn’t always translate to profits. An inventory turnover ratio could be high because the company offered large discounts. Wesfarmers’ Inventory turnover = 7.97, 7.74 Alimentation’ Inventory turnover = 34.27,
Suppliers are mostly concerned with a company 's ability to pay on their liabilities. Therefore, the current ratio and the quick ratio are both looked at by suppliers. The current ratio takes a company’s current assets and divides that by the company’s current liabilities. This number is
Operations management is essential for the survival and success of any organization. According to Heizer & Render (2011), operations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs. Operations managers today contend with competition, globalization, inflation, consumer demand, and consistent change in technology. Managers must focus on the efficiency and effectiveness of processes such as cost, dependability, distribution, flexibility, and speed. The intent of this paper is to discuss the processes and operations management of the Kroger Company.
Analyzing Wal-Mart's annual report provides a positive outlook on Wal-Mart's financial health. Given the specific ratios and its comparison to other companies in the same industry, Wal-Mart is leading and more than likely continue its dominance. Though Wal-Mart did not lead in all numbers, its leadership and strong presence of the market cements the ongoing success. The review of the current ratio, quick ratio, inventory turnover ratio, debt ratio, net profit margin ratio, ROI, ROE, and P/E ratio all indicate an upbeat future for the company. The current ratio, which is defined as current assets divided by current liabilities, is a measure of how much liabilities a company has compared to its assets. Wal-Mart in the year of 2007 had a current ratio of .90, and as of January 2008 it had a current ratio of .81. The quick ratio, which is defined as current assets minus inventory divided by current liabilities, is a measure of a company's ability pay short term obligations. Wal-Mart in the year of 2007 had a quick ratio of .25, and as of January 2008 it had a ratio of .21. Both the current ratio and quick ratio are a measure of liquidity. Wal-Mart is not as liquid as its competitors such as Costco or Family Dollar Stores Inc. I believe the reason why Wal-Mart is not too liquid is because they are heavily investing their profits for expansion and growth. Management claims in their financial report that holding their liquid reserves in other currencies have helped Wal-Mart hedge against inflationary pressures of the US dollar. The next ratio to look at is the inventory ratio which is defined as the cost of sales divided by average inventory. In the year of 2007, Wal-Mart’s inventory ratio was 7.68, and as of January 2008 it was 7.96. Wal-Mart has a lot of sales therefore it doesn’t have too much a problem of holding too much inventory. Its competitors have similar ratios though they don’t have as much sales as Wal-Mart. Wal-Mart’s ability to sell at lower prices for same quality, gives them the edge against its competition. As of the year 2007, Wal-Mart had a debt ratio of .58, and as of January 2008, it had a debt ratio of .59. The debt ratio is calculated by dividing the total debt by its total assets. Wal-Mart has a lot more assets than it does debt so Wal-Mart is not overleveraged.
Current ratio for Panera Bread is 1.73 in 2012 and has been fairly consistent for the past five years as shown in Table F1. Although Panera does come in just under the industry average of 1.98, a current ratio of 1.73 is a strong positive indicator. Panera can cover short-term debt obligations with its normal operations. The quick ratio of 1.65 strongly indicates Panera can cover its short-term obligations without utilizing its inventory. The company’s quick ratio is again just below the industry average, with the competitors Chipotle, Starbucks, and Einstein posting at 2.87, 1.34, and 1.00 respectively. Einstein’s current and quick ration are relatively low and should raise a change in needed.
.... In addition, inventory turnover shows a consistent increase from 2.16 in 2011 to 2.38 and 2.49 for 2012 and 2013 respectively.
Kroger has spread through to many different store formats, including supermarkets, department stores, convenience stores, and jewelry stores. According to STORES Media, Kroger supermarket chain worth 115 billion dollars, only second to Walmart. Kroger is also the third largest private employer in the Unites States with 443,000 employees according to kroger.com. Kroger is in 34 states and will most likely expand into more with time. The advantage Kroger has amongst its peers is the connivence an uniform quality within their stores. Even franchises such as Fred Meyer that Kroger owns will have similar store options and products in other Kroger owned stores. This advantage, similar to that of Starbucks, lets consumers know what to expect when entering a Kroger store. Unlike Columbia, Kroger has an very large number of employees, meaning a lot more opportunities for a job within the
Costco Wholesale Corporation is a membership warehouse club with 671 warehouses in nine countries on four continents. The company opened in 1976 under the Price Club name in San Diego, California. The first Costco warehouse opened in 1983 in Seattle, Washington. In 1993, Costco and Price Club merged under the name PriceCostco. In January 1997, after the spin-off of most of its non-warehouse assets to Price Enterprises, Inc., the Company changed its name to Costco Companies, Inc. On August 30, 1999, the Company reincorporated from Delaware to
Inventory turns: According to the data provided in the Williams-Sonoma Inc. case study (1990) average specialty store turns were just under 2x. If you look at the data from the Wal-Mart Article discount stores have turns many times that, actually turns around the neighborhood of 8x.
First things first, it is important to evaluate the ability of a company to pay its current liabilities. The current ratio measures a company’s ability to pay off its liabilities with its current assets. More specifically the ratio focuses on paying off the short term liabilities that are due within the year. Verizon’s current ratio at the end of the fiscal year was approximately 1.055. This indicates that the company has just slightly
Netflix is financially viable in the short term, and the company will likely stabilize in the long term. When evaluating the financial health of Netflix over the past five years, it was found that the current ratio is generally increasing, despite a decrease in 2016, showing investors that the company will be financially viable in the future. The quick ratio also shows investors that Having an ideal current ratio is important to the financial status of a company such as Netflix, as is the quick ratio.
In regards to the corporation’s balance sheet, it is necessary to place an importance on liquidity ratios to demonstrate the company’s ability to pay its short term obligations such as accounts payable and notes that have a duration of less than one year. These commonly used liquidity ratios include the current ratio, quick ratio, and cash ratio. All three ratios are used to measure the liquidity of a company or business. The current ratio is used to indicate a business’s ability to meet maturing obligations. The quick ratio is used to indicate the company’s ability to pay off debt. Finally the cash ratio is used to measure the amount of capital as well short term counterparts a business has over its current liabilities.
Starbucks’ solvency ratios provide valuable insight into whether the company is generating sufficient cash flow to meet short-term and long-term obligations. At the end of 2014, Starbucks current assets of $4169 million and current liabilities of $3039 million produced a current ratio of 1.37. During this same period, Starbucks had quick assets of $2474 million (cash of $1708 million + short-term investments of $135 million + accounts receivable of $631 million) with current liabilities of $3039 million resulting in a quick ratio of 0.81. These ratios imply that Starbucks was reasonably liquid at the end of 2014 with $1.37 in current assets and $0.81 in quick assets for every $1 in current liabilities. In 2013, Starbucks had a current ratio of 1.02 and a quick ratio of 0.71 and the previous year the company’s current ratio was 1.90 with a quick ratio of 1.14. This data shows that Starbucks’ current ratio and quick ratio decreased considerably from 2012 to 2013 indicating a reduction in liquidity. Starbucks liabilities increased dramatically in 2013 because of an accrued
Ratios traditionally measure the most important factors such as liquidity, solvency and profitability, as well as other measures of solvency. Different studies have found various ratios to be the most efficient indicators of solvency. Studies of ratio analysis began in the 1930’s, with several studies of the concluding that firms with the potential to file bankruptcy all exhibited different ratios than those companies that were financially sound. Among the study’s findings were that the deciding factor of the predictor of bankruptcy should not be only a few ratios, as the measure of a company’s financial solvency may differ as the firm’s situations differ. The important question is to which ratios are to be used and of those ratios chosen, which ratios are given priority weight.
Current ratiois the ratio that comparing current assets with current liabilities and to indicate whether there are sufficient short-term assets to meet the short-term liabilities. The higher the ratio, the more liquid the company is.