Scenario

Let’s take a look at both current assets and current liabilities for three competitors in the retail sales marketplace:

Macy’s, Inc.Kohl’s, Inc.Nordstrom, Inc.
in millions2/1/202/2/202/2/20
Current assets
      Cash and cash equivalents$ 685$ 723$ 853
      Receivables409179
      Merchandise Inventories5,1883,5371,920
      Prepaid expenses and other current assets528389278
$ 6,810$ 4,649$ 3,230
Current liabilities
      Short-term debt$ 539$ –$ –
      Accounts payable and accrued liabilities5,1302,4393,276
      Income taxes8148
      Current portion of long-term debt282244
$5,750$2,769$3,520
Working capital$ 1,060$ 1,880$ (290)

By now you should be recognizing these major categories of current liabilities and what they mean, as well as their relationship to the current assets. Just as current assets are expected to become cash in the near future, current liabilities are expected to consume cash in the near future. Based on this, both Macy’s and Kohl’s seemed to be in fairly good shape at the end of January of 2020. Nordstrom though shows more current debt than current assets.

Discussion Questions

  • What else do you notice about the three companies?
  • What do they have in common? Where are they drastically different?
  • What more would you like to know about these companies?

Access the financial statements from the following links and discuss any details you find interesting that are not apparent in the above summary: