Module02 - UF-ACG-5065 Assignment 33 Comparing TJX and...

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UF-ACG-5065 1f1e86983aad9bde695c776d505008bf77aa9b72.xls Assignment 33 page 1 of 14 Luther Setzer 1 NASA Pkwy E Stop NEM3, Kennedy Space Center, FL 32899 (321) 544-7435 Comparing TJX and Abercrombie & Fitch Following are selected income statement and balance sheet data from two retailers: (clothing retailer in the value-priced market). Income Statement ($ millions) ANF TJX Sales $2,021 $14,913 Cost of goods sold $680 33.6% $11,399 76.4% Gross profit $1,341 66.4% $3,514 23.6% Total expenses $1,125 55.7% $2,904 19.5% Net income $216 10.7% $610 4.1% Balance Sheets ($ millions) ANF TJX Current assets $672 48.4% $2,905 57.2% Long-term assets $715 51.6% $2,170 42.8% Total assets $1,387 $5,075 Current liabilities $429 30.9% $2,204 43.4% Long-term liabilities $288 20.8% $1,124 22.1% Total liabilities $717 51.7% $3,328 65.6% Stockholders' equity $670 48.3% $1,747 34.4% Total liabilities and equity $1,387 $5,075 a. Express each income statement account as a percentage of sales. Comment on any differences observed between these two companies, especially as they relate to their respective business models. b. Express each balance sheet account as a percentage of total assets. Comment on any differences observed between these two companies, especially as they relate to their respective business models. c. Which company has a higher proportion of stockholders' equity (and a lower proportion of debt)? What do the ratios tell us about relative riskiness of the two companies? Abercrombie & Fitch (clothing retailer in the high-end market) and TJX Companies
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UF-ACG-5065 1f1e86983aad9bde695c776d505008bf77aa9b72.xls Assignment 35 page 2 of 14 Luther Setzer 1 NASA Pkwy E Stop NEM3, Kennedy Space Center, FL 32899 (321) 544-7435 Comparing Income Statements and Balance Sheets of Competitors Following are selected income statement and balance sheet data for two communications companies: Income Statement ($ millions) Comcast Verizon Sales $22,255 $75,112 Cost of goods sold $7,969 35.8% $25,469 33.9% Gross profit $14,286 64.2% $49,643 66.1% Total expenses $13,358 60.0% $42,246 56.2% Net income $928 4.2% $7,397 9.8% Balance Sheets ($ millions) Comcast Verizon Current assets $2,954 2.9% $16,448 9.8% Long-term assets $100,192 97.1% $151,682 90.2% Total assets $103,146 $168,130 Current liabilities $6,269 6.1% $25,063 14.9% Long-term liabilities $56,001 54.3% $76,633 45.6% Total liabilities $62,270 60.4% $101,696 60.5% Stockholders' equity $40,876 39.6% $66,434 39.5% Total liabilities and equity $103,146 $168,130 a. Express each income statement account as a percentage of sales. Comment on any differences observed between these two companies, especially as they relate to their respective business models. b. Express each balance sheet account as a percentage of total assets. Comment on any differences observed between these two companies, especially as they relate to their respective business models. c. Both Verizon and Comcast have chosen a capital structure with a higher proportion of liabilities than equity. What implications does this capital structure decision have for our evaluation of the riskiness of these two companies? Take into consideration the large level of capital expenditures that each must make to remain competitive.
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