Financial Accounting 2.17.11

Financial Accounting 2.17.11 - Financial Accounting Chapter...

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Financial Accounting 2/17/11 Chapter 4 Continued. First Exam = 30 questions worth 8 points a piece, and last question is worth 10 points 4 Companies Financial Statement (Check in book chapter 4 for financial statements) Nordstrom is an analyst dream, or a financial statement dream. They put in information in a way that’s easy to analyze. Because they put in percentage, the income statement is common-size income statement, takes everything as a revenue of sales. Net Sales is 100%, and then you go down the line as a percent of sales. So Gross Profit Margin relative to sales is 37.5%. Nordstrom is doing very well. Wal-Mart wants to a be a supplier so their growth profit margin is relatively low. Gross Profit Margin is 24.2% (You have to calculate it). Think about when you walk into Nordstrom (they have a piano player, sales clerks everywhere to help you). Wal-Mart tries to be the place to supply goods at low costs to consumer (and different kinds of good). Operating income is 5.9 percent. Net income is 3.2% of revenue. Margins are lower for wal-mart than for Nordstrom. Does that make Nordstrom better than Wal-Mart? GAAP is short and sweet on Income Statement. They don’t give you exact amount of operating profit margin. So Gross profit margin is 28.1 and Operating expenses is 28.1. So subtract the two and get 7.3 Operating Margin. This company’s margins is not as high as Nordstrom and not as low as Wal-Mart. Net earnings is 4.9% of revenue Saks stores are high end because Gross Profit Margin is 38.6%, it’s the highest of the four. Saks has a tough time has a tough time controlling SG&A cost. Because they have this tough time, they’re selling all their assets. Nobodies willing to pay much for their assets because everybody knows they’re having a tough time controlling expenses. The areas they sold off were more profitable than the areas they were keeping. Tells us that
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This note was uploaded on 02/23/2011 for the course COMMERCE COMM 201 taught by Professor Erickson during the Spring '08 term at UVA.

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Financial Accounting 2.17.11 - Financial Accounting Chapter...

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