Analyze and Compare Costco, Wal-Mart, and Nordstrom: Accounting Homework, HTU, US

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University Hussein Technical University (HTU)- USA
Subject Accounting

Assignment Brief:

Analyze and compare Costco, Wal-Mart, and Nordstrom

The general merchandise retail industry has a number of segments represented by the following companies:

Company NameMerchandise 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:

CostcoWal-MartNordstrom
Cost of goods sold$102,901$360,984$9,168
Inventories:
Beginning of year8,90845,1411,733
End of year8,96944,4691,945
  • Determine the inventory turnover ratio for all three companies. Round all calculations to one decimal place.
Inventory Turnover
Costco
Wal-Mart
Nordstrom
  • 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
CostcoDays
Wal-MartDays
NordstromDays
  • Based on the results, which of the following statements is INCORRECT with regard to each company’s merchandising concept?
  1. Costco holds only mass-appeal items that are sold quickly off the shelf.
  2. Wal-Mart has attractive pricing, but the inventory moves more slowly than would be the case at a club warehouse.
  3. Nordstrom’s inventory moves slowly but at a higher margin.
  4. Wal-Mart’s inventory moves very quickly at higher margins.
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