chapter_05 - Chapter 5 Basics of Analysis To The Net 1....

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Unformatted text preview: Chapter 5 Basics of Analysis To The Net 1. Novel Partial Consolidated Statement of Operations Horizontal Common-Size Percent) Fiscal Year Ended October 31 2001 October 31 2000 October 31 1999 Net sales Cost of sales Gross profit Operating expenses Sales and marketing Product development General and administrative Restructuring charges Total operating expenses 81.7 110.1 73.0 102.2 81.9 140.3 N/A 110.8 91.3 109.9 85.6 114.0 97.4 113.4 N/A 115.2 100.0 100.0 100.0 100.0 100.0 100.0--0 100.0 Novell Partial Consolidated Statements of Operations Vertical Common-Size Fiscal Year Ended October 31 2001 October 31 2000 October 31 1999 Net sales Cost of sales Gross profit Operating expenses Sales and marketing Product development General and administrative Restructuring charges Total operating expenses 100.0 31.5 68.5 42.7 18.4 11.3 7.7 80.1 100.0 28.2 71.8 42.6 19.6 8.2 4.1 74.5 100.0 23.1 76.6 34.1 18.4 6.6-- 59.1 Comments A material decrease in revenue while cost of sales increased, resulting in a material decrease in gross profit. Operating expenses were not reasonably controlled except for product development. 88 2. Amazon (In thousands) Years Ended December 31 2001 2000 1999 Net sales Loss from operations Interest expense $3,122,433 $ 412,257 $ 139,232 $2,761,983 $ 863,880 $ 130,921 $1,639,839 $ 605,755 $ 84,566 Comment Material increase in sales Loss from operations even with the material increase in sales. Material increase in interest expense (note that interest expense was recognized after loss from operations. 3. Kroger Consolidated Statement of Income Horizontal Common Size Analysis with Change in Dollars (In millions) Increase (Decrease) 2001 52 weeks 2000 53 weeks Dollars Percent Sales Merchandise costs, including advertising, warehousing and transportation Gross profit Operating, general and administrative Rent Depreciation and amortization Goodwill amortization Asset impairment changes Restructuring charges Merger related costs Operating profit $50,098 36,398 13,700 9,483 650 973 103 91 37 4 $2,359 $49,000 35,804 13,196 9,152 647 907 101 191-- 15 $2,183 $1,098 594 504 331 3 66 2 (100) 37 (11) $ 176 102.2 101.7 103.8 103.6 100.5 107.3 102.0 47.6 N/A 26.7 108.1 89 QUESTIONS 5- 1. A ratio is a fraction comparing two numbers. Ratios make the comparisons in relative, rather than absolute, terms, which helps alleviate the problem of size difference. 5- 2. a. Liquidity is the ability to meet current obligations. Short-term creditors such as banks or suppliers would be particularly interested in these ratios. b. Borrowing capacity measures the protection of long-term creditors. Long-term bond holders would be particularly interested. c. Profitability means earning ability. Investors would be particularly interested....
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chapter_05 - Chapter 5 Basics of Analysis To The Net 1....

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