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CALCULATE THE WORKING CAPITAL AS % OF REVENUES

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CALCULATE THE WORKING CAPITAL AS % OF REVENUES

Table 13.6 Inventory Holdings: Home Improvement Stores Standard Deviation in Company Name Inventory Sales (%) 10.74 17.46 14.58 20.88 16.50 19.96 14.91 21.27 18.43 16.91 12.72 24.76 14.79 9.24 16.65 in (Revenues) Operating Earnings”(%) Building Materials Catalina Lighting Continental Materials Corp. Eagle Hardware Emco Limited Fastenal Co. The Home Depot HomeBase Inc. Hughes Supply Lowe’s Cos. National Home Centers Waxman Industries, Inc. Westburne Inc. Wolohan Lumber Average 6.59 5.09 4.59 6.88 7.14 5.99 10.09 7.30 7.54 9.22 5.02 4.66 7.76 6.05 35.82 52.76 25.15 45.50 39.68 43.41 24.15 36.93 35.90 33.72 70.93 112.57 25.14 24.56 43.30 This standard deviation was computed using five years of quarterly operating earnings for each of these firms and was based on percent changes in operating income from year to year Source: Value Line database.

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

 

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