Posted: April 11th, 2016
For the fiscal year ended Feb 2, 2013 (2012 Annual Report) for Kroger:
1a Which CPA firm audited the financial statements?
1b What type of opinion was issued?
2a What are “deposits in transit”?
2b Are they properly classified on the balance sheet? Explain briefly.
3a Compute the rate of change in weekly sales from 2010 to 2011, and 2011 to 2012. Comment briefly.
3b Why use weekly sales instead of annual sales in making this calculation?
4a What factor causes the difference between basic and fully diluted earnings per share for 2012?
4b Is this difference material?
4c Compute basic earnings per share for 2012 as if there were no treasury stock. Comment.
5 What was the amount of cash dividends paid in fiscal 2012?
6a Compute current ratio and quick ratio for both years presented.
6b Identify any observable change.
6c Identify the major contributing factor to this change.
7 How does the company recognize revenue from sales of Kroger-branded gift cards?
8 Why did Kroger take a charge of $18 for goodwill impairment in 2010?
9 Does Kroger consolidate any entities that it owns less than 100%? Explain.
10a For 2012 and 2011, compute debt/equity and debt/tangible net worth ratios.
10b For the same years, compute the ratio of operating cash flow to interest charges, and to total debt.
10c Comment briefly on the riskiness of Kroger’s capital structure.
11a Why is the commitments and contingencies line blank on the balance sheet?
11b Briefly describe any material litigation Kroger was involved in in 2012, and the resolution of the matter.
12a What is the total number of restricted shares outstanding at the end of fiscal 2012?
12b Is this material to the total number of shares outstanding? Explain briefly.
13a Distinguish between capital and operating leases.
13b Which type of lease does Kroger make greater use of?
13c What was the total net rent expense for 2012?
14 What was the amount of advertising expense for 2012?
15 Kroger’s sales are for cash. Why are there accounts receivable on the balance sheet?
16a Kroger has three types of benefit plans: qualified, non-qualified, and other. What is the funded status of these plans as of the end of 2012?
16b How, if at all, is this funding status reflected in the balance sheet?
16c What amount of expense was recognized for these three types of plan in 2012?
16d Kroger’s pension fund assets are invested largely in three types of investment. Identify these, and comment briefly.
17a What segments (product types) does Kroger divide its operations into?
17b What trend is observable in the relative importance of these segments in terms of sales?
18a Compute the following for years 2012, 2011, and 2010: gross profit margin, operating profit margin, net profit margin (return on sales).
18b Comment on Kroger’s profitability based on the above.
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