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Q2) Consider the financial statement of Kmart given in the table below. Kmart 2010 2009 Income Statement Net operating revenues Cost of goods sold Gross Profit Selling, general and administrative expenses Operating income 612400 606600 457000 456100 155400 150500 119500 116300 36000 34200 3100 3300 Interest expense 300 500 31400 Other income (loss)- net Income before taxes Income taxes Other expenses Net income 33100 10800 900 21600 10800 600 20100 Balance Sheet Assets Cash and cash equivalents Short term investments Net receivables Inventories Total current assets Property, plant and equipment Goodwill Other assets 2010 2009 11900 11000 0 0 6300 5900 49800 51800 72500 73500 153500 143500 24200 22900 6000 5400 Total assets 256100 245200 2009 2010 75900 7400 71500 11600 Liabilities and Stockholder Equity Accounts payable Short-term debt Other current liability Total current liability Long-term debt Other liabilities Total liabilities Stockholder equity 200 200 83400 71500 54700 51900 11600 11800 149500 146700 7900 4100 2010 2009 A. (20 points) Calculate the financial ratios of Kmart in 2010. Financial Ratio Formula 4.90 1. Return on Equity (ROE) 0.08 2. Return on Asset (ROA) 21.13% 3. Percentage of assets invested in inventory (PII) 4. Inventory Turnover (INVT)) 8.81 41.45 5. Days of inventory (DOI) 6. Days sales outstanding (DSO) 3.55 57.22 7. Days purchases outstanding (DPO) 8. Cash-to-cash Cycle (C2C) -12.22 B. (5 points) Analyze the change between the years 2009 and 2010 in terms of financial ratios. Which financial ratios would you check to evaluate the performance of inventory management and cash management? Which year is better in terms of inventory management and cash management