Safeway operates 1,761 supermarkets in the United States and Canada. In the United States, Safeway is located principally in the Western, Southwestern, Rocky Mountain, Midwestern, and Mid-Atlantic regions. Albertson€™s operates 2,471 stores in 37 Northeastern, Western, Midwestern, and Southern states. The Great Atlantic & Pacific Tea Company (A&P) operates 406 stores in the Northeast and in Canada. Selected financial statement information for 2006 for these three companies follows (in millions of U.S. dollars).

1. For each of the three companies, compute the following ratios:
(a) Current ratio
(b) Debt ratio
(c) Asset turnover
(d) Return on equity
2. Which company uses its inventory most efficiently? Which company uses its property, plant, and equipment most efficiently?
3. What dangers might there be in making ratio comparisons without viewing the financial statement notes for the individual companies?

Transcribed Image Text:

Safeway Albertson's A&P Inventory . Total current assets ...*... Property, plant, and equipment Total assets Total current Ilabilitles_.. Total llabilities *... Sales Cost of goods sold Net income $ 3,036 4,355 9,903 7,87 3,880 12,164 40,358 29,038 $ 405 1,210 898 2.499 610 .827 8,740 6,235 393 2,643 3,568 9.773 16,274 4,60 10,607 40,185 28.604 871 446