Kroger Co.’s 2007 financial statements contained the following data (in millions).
| Current assets | $6,755 |
| Accounts receivable | $773 |
| Total assets | 21,215 |
| Interest expense | 488 |
| Current liabilities | 7,581 |
| Income tax expense | 633 |
| Total liabilities | 16,292 |
| Net income | 1,115 |
| Cash | 189 |
Compute these values:
(a) Working capital.
(b) Current ratio.
Matthew Company and Mike Company are in the same industry. They are virtually identical, except that Matthew has not been replacing its PP&E regularly, and its PP&E is now getting quite old. Mike, in contrast, has a regular replacement plan, and its PP&E is relatively young. The difference in their asset replacement policies, all else being equal, would likely lead to which of the following:
a) The par value of Matthew’s common stock is likely to be less than Mike’s
b) Matthew’s ROA is likely to be greater than Mike’s company
c) Matthew’s current ratio is likely to be less than Mike’s
d) Matthew’s Accounts Payable turnover is likely to be lower than Mike’s
