1. NORDSTROM INC.
- Nordstrom’s Inventory Turnover from 2008 to 2010
- Inventory Cost Flow and Inventory Valuation Policy
- A Comparison with Nordstrom’sCompetitors
-Total Sales and Net Income
-Current Assets
-Current Liabilities

2. Nordstrom’s Inventory Turnover
Inventory Turnover = COGS / Average
Inventory
In 2010 it was 5.93 from [5,328M / (898M
+900M / 2)]
In 2009 it was 5.84 from [5,417M / (900M
+956M / 2)]
In 2008 it was 5.66 from [5,526M / (956M
+997M / 2)]
2010 62 days
2009 62.5 days
2008 65 days

3. A Look at the Competition
2010 62 days
2009 62.5 days
2008 65 days
Nordstrom Inc. Saks Fifth Avenue Inc.
2010 151 days @ 2.42
2009 140 days @ 2.6
2008 171 days @ 2.14
At a glance Nordstrom consistently
keeps inventory for fewer days than
its closest competitor (Saks Fifth
Avenue).
0
50
100
150
200
2008 2009 2010
Nordstrom Saks

4. To account for its billion dollar annual sales Nordstrom
uses a perpetual inventory system to record
merchandise sold
Inventory Cost Flow and Inventory Valuation Policy
Nordstrom values inventory at lower of cost or market value (LCM)
Nordstrom uses the weighted average cost method
The Weighted Average Cost Method:
Cost of Goods Available for Sale /
Total Units Available for Sale =
Weighted Average Cost

5. Total Sales and Net Income
Year 2010 2009
Total Sales 8,627M 7,573M
Net Income 441M 401M
Nordstrom Inc.
Improved inventory turnover rate generated more sales
resulting in a higher net income for 2010 than in 2009
The net income is a result of [total revenue -
operating expenses and cost of goods sold]
Year 2010 2009
Profit
Margin
5% 4.7%
Profit Margin = Net Income / Total Revenue

6. Total Sales and Net Income Cont’d
Year 2010 2009
Total Sales 8,627M 7,573M
Net Income 441M 401M
Nordstrom Inc.
0
2,250
4,500
6,750
9,000
2009 2010
Total Expense
Net Income

7. Current Assets
Year 2010 2009 2008
Cash 795M 72M 358M
Net Receivables 2,273M 2,152M 1,956M
Inventory 898M 900M 956M
Other Current Assets 88M 93M 78M
Total Current Assets 4,052M 3,217M 3,361M
Total Current Assets

8. 3%
28%
67%
2%
2009 2008
2%
29%
58%
11%
Cash
Net Receivables
Inventory
Other Current Assets
2010
2%
22%
56%
20%
Current Assets

9. Current Liabilities
Year 2010 2009 2008
Accounts Payable 1,062M 777M 882M
Debt 456M 299M 261M
Other Current Liabilities 596M 525M 492M
Total Current Liabilities 2,014M 1,601M 1,635M
0
525
1,050
1,575
2,100
2010 2009 2008
Total Current Liabilities

10. Current Liabilities
2010 2009 2008
60%
8%
32%
Accounts Payable
Debt
Other Current Liabilities
33%
19%
49%
30%
16%
54%

11. Cash Flow Statement Explained
So What is a Cash Flow Statement?
A financial statement explaining the flow of cash in and out
of a business
When a firm makes an investment or purchases supplies
and equipment the cash amount decreases
Increases in cash come from 1) net earnings 2) decreases in
accounts receivable 3) increases in accounts payable and
4) increases in other liabilities

12. Cash Flow Statement
Year 2010 2009 2008
Net Cash from
Operating Activities
1,251M 848M 161M
Net Cash from
Investing Activities
-541M -792M -270M
Net Cash from
Financial Activities
13M -342M 64M
Net Change in
Cash
723M -286M -45M
Cash at Beginning
of Period
72M 358M 403M
Cash at End of
Period
795M 72M 358M