Question

Table 13.5 Working Capital Ratios across Retail Building Supplies Firms Noncash Working Capital Noncash Working Capital as % of Revenues Sales Company Name Building Materials $729.00 197.00 98.00 971.00 1,262.00 398.00 24,156.00 1,879.00 1,137.00 2,334.00 425.00 16.44 20.65 25.06 15.C7 18.25 31.16 11.59 25.50 25.31 11.23 13.77 19.51 $119.83 40.68 24.66 152.19 230.28 124.01 Catalina Lighting Continental Materials Corp. Eagle Hardware Emco Limited Fastenal Co. The Home Depot Hughes Supply Lowe's Cos. Westburne Inc. Wolohan Lumber Average Source: Value Line. 2,800.00 479.1501 287.739967 262.1601 58.46

QUESTIONS

1) CALCULATE THE WORKING CAPITAL AS % OF REVENUES FOR EACH COMPANY

2) FIND OUT WHETHER EACH COMPANY IS OVER INVESTED OR UNDER INVESTED

3) WHAT IS THE STATUS OF EACH COMPANY IN TERMS OF WORKING CAPITAL INVESTMENT COMPARED TO INDUSTRY AVERAGE

Answer 1

1) The working capital as % of revenues for each company is correct.
2 & 3) The over or under invested of Working Capital as compared to industry average.
Company name	Non Cash W.C. as % of Rev.	Industry Avg.	Difference	Over or Under-invested
Building Materials	16.44	19.51	-3.07	Under-invested
Catalina	20.65	19.51	1.14	Over-invested
Continental	25.06	19.51	5.55	Over-invested
Eagle	15.67	19.51	-3.84	Under-invested
Emco	18.25	19.51	-1.26	Under-invested
Fastenal	31.16	19.51	11.65	Over-invested
The Home Depot	11.59	19.51	-7.92	Under-invested
Hughes	25.5	19.51	5.99	Over-invested
Lowe's Cos.	25.31	19.51	5.8	Over-invested
Westburne	11.23	19.51	-8.28	Under-invested
Wolohan	13.77	19.51	-5.74	Under-invested