Inventory turnover and number of days’ sales in inventory OBJ. 7 Kroger, Safeway Inc., and Whole Foods Markets, Inc. are three grocery chains in the United States. Inventory management is an important aspect of the grocery retail business. Recent balance sheets for these three companies indicated the following merchandise inventory information:

Merchandise Inventory End of Year (in millions) Beginning of Year (in millions)

Kroger $5,114 $4,966 Safeway 2,470 2,623 Whole Foods 374 337 The cost of goods sold for each company was:

Cost of Goods Sold (in millions)

Kroger $71,494 Safeway 31,837 Whole Foods 11,699

a. Determine the number of days’ sales in inventory (use 365 days and round to the nearest day) and the inventory turnover (round to one decimal place) for the three companies.

b. Interpret your results in part (a).

c. If Kroger had Whole Foods’ number of days’ sales in inventory, how much additional cash flow (rounded to nearest million) would have been generated from the smaller inventory relative to its actual average inventory position?

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