PS_04_Solution_(F2009)

PS_04_Solution_(F2009) - FINANCIAL ACCOUNTING BUSI W3013 |...

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F INANCIAL A CCOUNTING BUSI W3013 | F ALL 2009 S OLUTION TO P ROBLEM S ET 04 P ROFESSOR A NDREW S CHMIDT Part I: Kohl’s and Nordstrom Nordstroms Kohls 2008 2007 2008 2007 OA 5,661 5,600 $10,493 $10,077 OL 2,213 1,988 $2,525 $2,393 NOA 3,448 3,612 $7,968 $7,684 Equity 1,210 1,115 6,739 6,102 NFO 2,238 2,497 $1,229 $1,582 NOPAT 506.35 998.40 NFE 131 111 Nordstroms Kohls ROE 34.49% 13.78% RNOA 14.34% 12.76% FLEV*Spread 21.89% 1.67% FLEV 2.0366 0.2189 Spread 10.75% 7.62% NOPM 5.91% 6.09% NOAT 2.4286 2.0942 1. See above. 2. See above. 3. Nordstrom has a larger ROE and operating return (RNOA), but the bulk of Nordstroms’ ROE is from non- operating sources (FLEV*Spread = 21.89%). Nordstrom has close to 10 times the leverage of Kohls, yet its ROE is only 2.5 times higher than Kohls’ ROE. 4. Nordstrom prides itself on being a differentiator and Kohls is more characteristic of a cost leader. However, you would never know this looking at both firms’ NOPM and NOAT. Nordstrom has a lower (higher) NOPM (NOAT) than Kohls, which is completely opposite of what you would expect! Part II. Daktronics, Inc. 1. Depending on how you count, Daktronics uses six or seven different revenue recognition methods. BUSI W3013 Solution to Problem Set 04 | Page 1
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Multiple-element arrangements: We generate revenue from the sale of equipment and related services, including customization, installation and maintenance services. In some instances, we provide some or all of the above to our customers under the terms of a single multiple-element sales arrangement. These arrangements typically involve the sale of equipment bundled with some or all of these services, but may also involve instances in which we have contracted to deliver multiple pieces of equipment over time, rather than at a single point in time. When a sales
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PS_04_Solution_(F2009) - FINANCIAL ACCOUNTING BUSI W3013 |...

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