Question

Table A: Income Statement for Costco and Macy’s

	Costco Income statement	Macy's Income statement
	2012	2012
Net sales	97,062	30,000
Membership fees	2,075
Total revenue	99,137	30,000
Cost of goods sold (COGS)	86,823	20,000
Gross Margin	12,314	10,000
Selling, general, and administrative (SG&A)	9,518	6,000
Operating Profit	2,796	4,000
Other income (expenses)	-95	40
interest Income	103	-600
Provision for income tax	-84	-900
Net profit	2,720	2,540
g=+Gross margin percent	10.5%	33.3%
SG&A percent of sales	9.8%	20.0%
operatring profit percent	2.9%	13.3%
Net profit percent	2.80%	8.5%

Table B: Balance sheet for Costco and Macy’s

	Costco	Macy's
Cash and cash equivalents	4,009	4000
short-term investments	1,604
Accounts receivable	965	400
Merchandise inventory	6,638	8000
other current assets	490	465
total current assets	13,706	12865
Property and equipment (net)	12,432	10000
Other assets	623	6000
Total assets	26,761	28865
current liabilities	12,050	8000
Long term debt	1,253	8000
other liabilities	885	3000
Total liabilities	14,188	19000
Stockholder equity	12,573	8000

1. Show how to calculate Total Assets. Compare and discuss findings.

2. Calculate the Asset Turnover. Compare and discuss findings.

3. Calculate the Return On Assets. Compare and discuss findings.

4. What is Macy’s retail strategy and how is it reflected in the strategic management path? What about Costco’s retail strategy?

Answer 1

a)

The total assets of Macy's is $26,761 and the total assets of Cosco's $28,865.

The Cosco's expanded their business the investing more money on assets.

B)

Assets turnover ratio is as follows:

Macy's assets turnover ratio

Costco's assets turnover ratio

The Costco,s not utilised their assets effeciently in comparison of Macy's, whose assets turnover is better than than Costco's assets ratio

c)

Returns on Assets

Macy's return on assets.

Costco's net return on assets:

Macy's control utilise the assets properly and effeciently and control the expenditure in a better way in comparison to Castco', Castco's not able to control their expenditure in effective way and not utilise their assets in effective way.

d)

The Macy's retail strategy is to focus on their effeciency, not in capital budgeting to expanding their business and earn higher profit, but the Costco's expand their business by investing in capital budgeting and financing loans from bank but not able to use these assets effectively thats why their ratio is poor in comaprison on Macy's