P2-50. Compare Cash Flows Across Retailers Following are selected accounts from the income statement and the statement of cash flows for several retailers, for their fiscal years ended in 2018. Cash Flows from Net $ millions Sales Income Operating Investing Financing $ 25,739 $ 1,108 108,203 $ 1,735 13,038 Macy's...... Home Depot Best Buy Target... $ (456) (2,416) 508 (3,416) (24,036) $ (1,544) (12,420) (2,018) (3,644) (2,537) 11,121 .... .. 42,879 75,356 511,729 1,464 2,937 6,670 2,408 5,973 ..... Walmart Stores.. 27,753 Required a. Compute the ratio of net income to sales for each company. Rank the companies on the basis of this ratio. Do their respective business models give insight into these differences? b. Compute net cash flows from operating activities as a percentage of sales. Rank the companies on the basis of this ratio. Does this ranking coincide with the ratio rankings from part a? Suggest one or more reasons for any differences observed. c. Compute net cash flows from investing activities as a percentage of sales. Rank the companies on the basis of this ratio. Does this ranking coincide with the ratio rankings from part a? Suggest one or more reasons for any differences observed.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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P2-50. Compare Cash Flows Across Retailers
Following are selected accounts from the income statement and the statement of cash flows for several
retailers, for their fiscal years ended in 2018.
Cash Flows from
Net
$ millions
Sales
Income Operating Investing Financing
Macy's.....
Home Depot
Best Buy.
Target.....
Walmart Stores.....
$ 25,739 $ 1,108
108,203
11,121
42,879
$ (1,544)
(12,420)
(2,018)
(3,644)
(2,537)
$ 1,735
13,038
$ ( 456)
(2,416)
1,464
2,937
2,408
5,973
508
....
75,356
511,729
(3,416)
(24,036)
6,670
27,753
Required
a. Compute the ratio of net income to sales for each company. Rank the companies on the basis of this
ratio. Do their respective business models give insight into these differences?
b. Compute net cash flows from operating activities as a percentage of sales. Rank the companies on
the basis of this ratio. Does this ranking coincide with the ratio rankings from part a? Suggest one or
more reasons for any differences observed.
c. Compute net cash flows from investing activities as a percentage of sales. Rank the companies on
the basis of this ratio. Does this ranking coincide with the ratio rankings from part a? Suggest one or
more reasons for any differences observed.
Transcribed Image Text:P2-50. Compare Cash Flows Across Retailers Following are selected accounts from the income statement and the statement of cash flows for several retailers, for their fiscal years ended in 2018. Cash Flows from Net $ millions Sales Income Operating Investing Financing Macy's..... Home Depot Best Buy. Target..... Walmart Stores..... $ 25,739 $ 1,108 108,203 11,121 42,879 $ (1,544) (12,420) (2,018) (3,644) (2,537) $ 1,735 13,038 $ ( 456) (2,416) 1,464 2,937 2,408 5,973 508 .... 75,356 511,729 (3,416) (24,036) 6,670 27,753 Required a. Compute the ratio of net income to sales for each company. Rank the companies on the basis of this ratio. Do their respective business models give insight into these differences? b. Compute net cash flows from operating activities as a percentage of sales. Rank the companies on the basis of this ratio. Does this ranking coincide with the ratio rankings from part a? Suggest one or more reasons for any differences observed. c. Compute net cash flows from investing activities as a percentage of sales. Rank the companies on the basis of this ratio. Does this ranking coincide with the ratio rankings from part a? Suggest one or more reasons for any differences observed.
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