Question

In: Finance

Prepare common-size income statements for Wal-Mart and Starbucks using the January 2014 information for Walmart and...

  1. Prepare common-size income statements for Wal-Mart and Starbucks using the January 2014 information for Walmart and your new pro forma September 2013 information for Starbucks provided in Problems 5 and 6.Which company is doing a better job of getting sales dollars to net income? Where is the one company having an advantage over the other company in turning revenue into net income?

Wal-Mart

Starbucks

Account

Jan. 31, 2013

Sep. 30, 2013

Sales

$476,294

$14,892

COGS

$358,069

$6,382

SG&A

$91,763

$5,929

EBIT

$26,462

$2,581

Interest

$2,335

$28

Taxes

$8,105

$945

Net Income

$16,022

$1,608

  1. SDJ, Inc., has net working capital of $1,050, current liabilities of $4,300, and inventory of $1,300. What is the current ratio? What is the quick ratio?

  1. Music Row, Inc. has sales of $32 million, total assets of $43 million, and total debt of $9 million. If the profit margin is 7%, what is net income? What is ROA? What is ROE?

  1. Bethesda Co. had additions to retained earnings for the year just ended of $275,000. The firm paid out $150,000 in cash dividends, and it has ending total equity of $6 million. If Bethesda currently has 125,000 shares of common stock outstanding, what are earnings per share? Dividends per share? Book value per share? If the stock currently sells for $95 per share, what is the market to book ratio? The price earnings ratio?

Solutions

Expert Solution

As per rules I am answering the first 4 subparts of the question.

1:

Wal-Mart Starbucks
Account Jan. 31, 2013 Common Size Sep. 30, 2013 Common Size
Sales $476,294 100.00% $14,892 100.00%
COGS $358,069 75.18% $6,382 42.86%
SG&A $91,763 19.27% $5,929 39.81%
EBIT $26,462 5.56% $2,581 17.33%
Interest $2,335 0.49% $28 0.19%
Taxes $8,105 1.70% $945 6.35%
Net Income $16,022 3.36% $1,608 10.80%

2: Starbucks is doing a better job of getting sales dollars to net income. It has a higher Net Income ratio of 10.8% ascompared to 3.36% of Walmart.

3: The cost of goods sold calculated as a percentage of sales is much higher in case of Wal-Mart as compared to Starbucks. We see from the analysis that cost of goods sold is 75.18% of sales in case of Wal-Mart while the cost of goods sold of Starbucks is 42.86% of total sales.

4:

Current ratio= current assets/current liabilities

= (net working capital+ current liabilities)/current liabilities

= (1050+4300)/4300

=5350/4300

=1.24

Quick ratio= (current assets-inventory)/current liabilities

= (5350-1300)/4300

=0.94

jeff jeffy answered 10 months ago
Next > < Previous

Related Solutions

Common-size financial statements. Prepare common-size income statements for Walmart and Starbucks using the January 2015 and...
Common-size financial statements. Prepare common-size income statements for Walmart and Starbucks using the January 2015 and September 2014 information in the popup window: LOADING... . Which company is doing a better job of getting sales dollars to net income? Where is the one company having an advantage over the other company in turning revenue into net income? Complete the table below: (Round to two decimal places. Net income to three decimal places.) Abbreviated Income Statements ($ in Millions) Company Walmart,...
Common-size financial statements. Prepare​ common-size income statements for Walmart and Starbucks using the January 2015 and...
Common-size financial statements. Prepare​ common-size income statements for Walmart and Starbucks using the January 2015 and September 2014 information in the popup​ window: Which company is doing a better job of getting sales dollars to net​ income? Where is the one company having an advantage over the other company in turning revenue into net​ income? Complete the table​ below: (Round to two decimal places. Net income to three decimal​ places.) Abbreviated Income Statements ($ in Millions) Company Walmart, Inc. Starbucks...
Common-size financial statements. Prepare​ common-size income statements for Walmart and Starbucks using the January 2015 and...
Common-size financial statements. Prepare​ common-size income statements for Walmart and Starbucks using the January 2015 and September 2014 information in the popup​ window:   LOADING... . Which company is doing a better job of getting sales dollars to net​ income? Where is the one company having an advantage over the other company in turning revenue into net​ income? Complete the table​ below:  ​(Round to two decimal places. Net income to three decimal​ places.) Abbreviated Income Statements ($ in Millions) Company Walmart,...
You are considering an investment in the common stock of Wal-Mart. The following information is from...
You are considering an investment in the common stock of Wal-Mart. The following information is from the consolidated statements of income of Wal-Mart Stores, Inc. and Subsidiaries for the years ended January 31, 2016 and 2015 and the consolidated statements of operations for its competitor Target Corporation for the years ended January 30, 2016, and January 31, 2015 (included in the companies’ Form 10-Ks, amounts in millions of dollars): Wal-Mart Target (in millions) Year Ended January 31, 2016 Year Ended...
Selected financial data of Target and Wal-Mart for 2017 are below (in millions). Target Wal-Mart Income...
Selected financial data of Target and Wal-Mart for 2017 are below (in millions). Target Wal-Mart Income Statement Data for Year Net sales $65,357 $408,214 Cost of goods sold 45,583 304,657 Selling and administrative expenses 15,101 79,607 Interest expense 707 2,065 Other income (expense) (94) (411) Income tax expense 1,384 7,139 Net income $ 2,488 $ 14,335 Balance Sheet Data (End of Year) Current assets $18,424 $ 48,331 Noncurrent assets 26,109 122,375 Total assets $44,533 $170,706 Current liabilities $11,327 $ 55,561...
AMERICAN APPAREL: DROWNING IN DEBT?1 Prepare the company’s common-size balance sheets and common-size income statements for...
AMERICAN APPAREL: DROWNING IN DEBT?1 Prepare the company’s common-size balance sheets and common-size income statements for the recent three years 2011-2013 (including all subtotals and totals and round to 2 numbers after the decimal). Analyze three major components based on the common-size balance sheets and the trends of those components over the three years. Analyze two major components based on the common-size income statements and the trends of those components over the three years. Use 10.00% as a threshold.
prepare a common size income statement from the following income statement: CONSOLIDATED STATEMENTS OF OPERATIONS -...
prepare a common size income statement from the following income statement: CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) 12 Months Ended shares in Millions, $ in Millions Feb. 01, 2020 Feb. 02, 2019 Feb. 03, 2018 Total net sales $10,716 $11,664 $12,554 Credit income and other 451 355 319 Total revenues 11,167 12,019 12,873 Costs and expenses/(income): Cost of goods sold (exclusive of depreciation and amortization shown separately below) 7,013 7,870 8,208 Selling, general and administrative (SG&A) 3,585 3,596 3,845...
Using the following information from an annual report, prepare a Common size (vertical analysis) of the...
Using the following information from an annual report, prepare a Common size (vertical analysis) of the consolidated statement of earnings for the fiscal year ended June 30, 2014. (Round percentage answers to one decimal place.)   2 points (In millions) Net sales $18,862 Cost of sales     10,321 Gross margin $ 8,541 Selling expenses General and Administrative expenses $ 3,043 978 Total operating expenses $ 4,021 Income from operations $   4,520 Interest expense (80)           Earnings before income taxes $ 4,440...
Analyze the following common size income statements for 3T Company: 2015 2014 Net sales 100% 100%...
Analyze the following common size income statements for 3T Company: 2015 2014 Net sales 100% 100% COGS 89 87       Gross margin 11% 13% Selling, general and administrative     7 9 Restructuring, asset impairments and other charges     0    9        Income/(loss) from operations 4% (5)% Interest expense (1) (2)      Income/(loss) before taxes 3% (7%) Provision for/(benefit from) income taxes    1 0      Income/(loss) after taxes 2% (7)% Discontinued operations, net 6 1      Net income (loss)...
Answer question. Analyze the common size income statements below for 3T Company: 2015 2014 Net sales...
Answer question. Analyze the common size income statements below for 3T Company: 2015 2014 Net sales 100% 100% COGS 89 87       Gross margin 11% 13% Selling, general and administrative     7 9 Restructuring, asset impairments and other charges     0    9        Income/(loss) from operations 4% (5)% Interest expense (1) (2)      Income/(loss) before taxes 3% (7%) Provision for/(benefit from) income taxes    1 0      Income/(loss) after taxes 2% (7)% Discontinued operations, net 6 1      Net...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT