Adjusting Entries “Adjusting entries update the financial records for events that have occurred, but no document for a transaction exists (McIntosh 2016).” There are several types of adjusting entries such as depreciation, prepaid expenses, and supplies. On its balance sheet, Kroger lists prepaid and other current assets. A company would definitely want to show these items because without them they are not correctly reporting items. It can cause a misrepresentation of the figures that are reported. Industry Summation Kroger is one of the leading companies in the grocery store industry. Its biggest competitors are Supervalu Inc and Whole Foods Market Inc. Unfortunately; it is rather hard to find some of the industry averages for the financial …show more content…
The attached excel sheet, shows Kroger’s financial ratios and the industries average ratios. In 2015, Kroger was under the industry average for its quick ratio. Kroger’s was 0.222 and the industry average was 0.35. In 2016, it was 0.226 and again came in under the industry average of 0.48. The next ratio that I could find the information for was the debt-to-equity ratio. Kroger’s is 0.349 for 2015 and 0.348 in 2016. The industry’s is quite a bit lower at 0.02 for 2015 and 0.01 for 2016. It shows us that Kroger is carrying a high load of debt compared to its equity. Creditors and Investors would find that this would make Kroger a higher risk to invest in. Kroger’s gross profit margin for 2015 is 19.37% while the industry average is 22.24% for that perspective year. In 2016, Kroger’s gross profit margin raised a little to 20.26% while the industry’s raised just a little to 22.94%. Kroger’s gross profit margin in previous years was 18.85% and 18.82% for the years 2013 and 2014. A raise such as this could be because of Kroger’s acquisition of another company or because of regulation changes. Kroger is running somewhat lower than the industry average. Next, net profit margin which shows us how much of each dollar is profit. Kroger’s 2015 net profit …show more content…
This will have a hard effect on our accounts receivable. Whether we receive any payment on their current debt with us will be determined by what type of bankruptcy they file. According to this article, “business that needs to save its accounts receivable is a company that intends to continue operating when it emerges from bankruptcy. Therefore that company must file for bankruptcy under Chapter 11, which allows the company to reorganize its debts and finances over a specified period. A company repays as much debt as possible under the reorganization plan filed and accepted by the bankruptcy court. When the company resumes normal business operations, all of its bankruptcy debts are considered fully discharged (Wright 2016).” There is a chance that we may petition the court to for them to pay some of the debt they owe us. If they file Chapter 7 and completely liquidate the company we will not be able to collect any of the debt they owe us so we may have to change our strategies to cover the losses. We will have to watch carefully to see how this