Evaluate the company''s current ratio and quick ratio

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Reference no: EM1312797

Calculation of current assets, quick assets, current ratio, quick ratio and working capital.

The Kroger Company is one of the world's largest supermarket chains. These selected items were adapted from a recent Kroger balance sheet. (Dollar amounts are in millions)

Cash (including deposit-in-transit)	$918
Receivables	786
Merchandise inventories	4,855
Other current assets	555
Property, plant and equipment	12,498
Retained earnings	6,480
Total current liabilities	8,689

Instructions:

a. Using the information above, compute the amounts of Kroger's total current assets and total quick assets.
b. Compute the company's (1) current ratio, (2) quick ratio, and (3) working capital.(Round to one decimal place.)
c. From these computations, are you able to conclude whether Kroger is a good credit risk for short-term creditors or on the brink of bankruptcy? Explain.
d. Is there anything unusual about the operating cycle of supermarkets that would make you think that they would normally have lower current ratios than, say, large department stores?
e. What other types of information would you utilize in performing a more complete analysis of Kroger's liquidity?

Reference no: EM1312797

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