Concept explainers
Quantitative metrics
JetBlue Airways Corporation (JBLU) is a passenger airline with flights to destinations throughout the United States, the Caribbean. and Latin America. Costco (COST) operates membership retail warehouses offering a variety of products including foods, electronics, appliances, and clothing.
For each company, go to the Securities and Exchange Commission (SEQ Internet site bitp://u’wu’.sc i/edgar/warcbedgar/companywarcb.birnl. In the search box ‘Fast Search, enter the Central Index Key (stock market ticker symbol) shown next to the company name. Once the EDGAR Search screen appears, type in 10-K for Filing Type. Open the most recent 10-K file and search the file for ‘metric using the ‘Edit and Find’ functions.
List the quantitative metrics that appear in each company’s 10-K.
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- Analyze and compare Amazon.com and Wal-Mart Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Wal-Mart Stores, Inc. (WMT) is the largest retailer in the United States. Amazon and Wal-Mart compete in similar markets; however, Wal-Mart sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. Interest expense and income before income tax expense from the financial statements of both companies for two recent years follow (in millions): a. Compute the times interest earned ratio for both companies for the two years. Round to one decimal place. b. Interpret Amazons interest coverage from Year 1 to Year 2. c. Does a times interest earned ratio less than 1.0 mean that creditors will not get paid interest? d. Interpret Wal-Marts interest coverage from Year 1 to Year 2. e. Which company appears to have the greater protection for creditors?arrow_forwardAmazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Target Corporation (TGT) is one of the largest value-priced general merchandisers operating in the United States. Target sells through nearly 1,800 brick-and-mortar stores and through the Internet. Amazon and Target compete for customers across a wide variety of products, including media, general merchandise, apparel, and consumer electronics. Cost of goods sold and inventory information from a recent annual report are provided for both companies as follows (in millions): a. Compute the inventory turnover for both companies. Round all calculations to one decimal place. b. Compute the number of days sales in inventory for both companies. Use 365 days and round all calculations to one decimal place. c. Which company has the better inventory efficiency? d. What might explain the difference in inventory efficiency between the two companies?arrow_forwardIdentification of Commodity Businesses. A recent article in Fortune magazine listed the following firms among the top ten most admired companies in the United States: Dell, Southwest Airlines, Microsoft, and Johnson Johnson. Access the websites of these four companies or read the Business section of their Form 10-K reports (www.sec.gov). Describe whether you would view their products or services as commodities. Explain your reasoning.arrow_forward
- Computing NOPAT, NOPM and RNOA LVMH Moët Hennessy Louis Vuitton SE (LVMH) is a French multinational luxury goods conglomerate headquartered in Paris. The following information is selected from their 2017 annual report. (€ thousands) Revenue Operating income Net interest expense and other nonoperating expense Net income Operating assets Operating liabilities LVMH has an income tax rate of approximately 30% a. Compute LVMH's net operating profit after taxes (NOPAT) for 2017 and 2016. Round answers to the nearest whole number. 2016 € 2017 € 2017 2016 42,636 37,600 8,113 6,904 179 432 5,616 4,363 67,246 58,504 26,714 24,340 b. Compute LVMH's net operating profit margin (NOPM) for each year. Round answers to one decimal place. (Ex: 0.2345 = 23.5%) %6 2016 2017 c. Compute LVMH's return on net operating assets (RNOA) for 2017. Round answers to one decimal place. (Ex: 0.2345 = 23.5%) 2017arrow_forwardAnalyze and compare Clorox and Procter & Gamble The Clorox Company (CLX) and The Procter & Gamble Company (PG) produce and sell packaged consumer products around the world. Income and interest expense information from financial statements for a recent year follows (in millions): Clorox Procter & Gamble Interest expense $88 $579 Income before income tax expense 983 13,369 a. Compute the times interest earned for each company. Round to one decimal place. Clorox: fill in the blank 1 Procter & Gamble: fill in the blank 2 b. If you were a lender to these two companies, which one appears to have the greater coverage of interest expense and thus the greater protection for your loan interest?arrow_forwardComputing NOPAT, NOPM and RNOA LVMH Moët Hennessy Louis Vuitton SE (LVMH) is a French multinational luxury goods conglomerate headquartered in Paris. The following information is selected from their 2020 annual report. (€ millions) 2020 2019 Revenue Operating income Net financial income/(expense) Net income Operating assets 44,651 53,670 7,972 11,273 (608) (559) 4,702 7,171 107,932 95,592 Operating liabilities 45,139 45,431 LVMH has an income tax rate of approximately 30% a. Compute LVMH's net operating profit after taxes (NOPAT) for 2020 and 2019. Round answers to one decimal place. 2019 € 2020 € 0 0 b. Compute LVMH's net operating profit margin (NOPM) for each year. Round answers to two decimal places (i.e. 0.25466 = 24.47%) 2019 2020 0% 0% c. Compute LVMH's return on net operating assets (RNOA) for 2020. Round answer to two decimal places (i.e. 0.25466 = 24.47%) 2020 Check 0%arrow_forward
- GREEN POND NURSERY (STANDALONE PC-BASED ACCOUNTING SYSTEM) Green Pond Nursery Supply (GPNS) is a garden center wholesaler in eastern Pennsylvania that sells and distributes a wide range of garden products and equipment including organic fertilizers, premium flower and grass seeds, organic pesticides, and garden spreaders. GPNSs customers are primarily small garden centers and landscape companies in the Mid-Atlantic States. Sales are on credit. GPNSs current information system includes manual procedures supported by independent (non-networked) PCs in each department Communications between departments are entirely through hard-copy documents. Recently, GPNS has been receiving complaints from suppliers regarding payment errors. Management believes that these complaints stem, in part, from their antiquated computer system. You have been hired to assess GPNSs procedures and internal controls. The following is a description of GPNSs expenditure cycle. Purchasing Process The purchasing agent receives an inventory status report from the inventory control department, which identifies the items that need to be reordered. The agent selects the suppliers, enters this information into the computer terminal to create a digital purchase order, and then prints three hard copies of the purchase order. He sends one copy to the supplier; one copy to the AP department, where it is filed temporarily, and files the third copy in the purchasing department. When the goods are received, the receiving department inspects and verifies them using the packing slip, which is attached to the goods. The receiving clerk manually prepares two hard copies of a receiving report. One copy accompanies the goods to the warehouse for storage. The receiving clerk sends the second copy to the purchasing agent who closes the open purchase order. The purchase agent then forwards the receiving report to the inventory control clerk. The inventory control clerk receives the receiving report and updates the inventory subsidiary. At the close of business, the clerk prepares an inventory summary, which he sends to the general ledger clerk. Accounts Payable and Cash Disbursements Procedures The AP clerk receives the suppliers invoice and reconciles it with the purchase order in the temporary file. From her computer terminal, the clerk records the purchase in the purchases journal and records the liability by adding a record to the AP subsidiary ledger. The purchases order and invoice are then filed in the department. Each day, the AP clerk visually searches the AP subsidiary ledger from her terminal for invoices that are due to be paid. The clerk prepares the check and records it in the digital check register. The negotiable portion of the check is mailed to the vendor, and a check copy is filed. The clerk then closes the liability in the AP subsidiary ledger and prepares a journal voucher, which she sends to the general ledger clerk. Upon receipt of the inventory summary and journal voucher, the general ledger clerk updates the inventory control, AP control, and cash accounts. Required a. Create a data flow diagram of the current system. b. Create a system flowchart of the existing system. c. Analyze the physical internal control weaknesses in the system. d. (Optional) Prepare a system flowchart of a redesigned computer-based system that resolves the control weaknesses that you identified. Explain your solution.arrow_forwardNizwa Supplies LLC is trading wholesale merchandise business in Muscat. The Business have more Suppliers (vendors) which can be found in a. Sales journal b. Purchase ledger c. General journal d. Cash receipt journalarrow_forward8 Alimentation Couche-Tard Inc. is a leading convenience store operator in Canada, with Couche-Tard stores in Quebec and Mac's stores in central and western Canada. It also operates Circle K shops in the United States and Ingo automated fuel sites in Sweden and Denmark. Revenues Cost of sales Gross profit CONSOLIDATED STATEMENTS OF EARNINGS For the years ended April 24, 2022, April 25, 2021, and April 28, 2020 (in millions of U.S. dollars) Operating, selling, administrative, and general expenses (Gain) loss on disposal of property and equipment and other assets Depreciation, amortization, and impairment Total operating expenses Operating income Share of earnings of joint ventures and associated companies Net financial expenses Earnings before income taxes Income taxes Net earnings Revenues Cost of sales Gross profit $ $ 2022 28,000 23,699.2 4,300.8 3,304.0 (3.2) 2021 $ 27,590.0 23,619.8 3,970.2 3,145.3 (19.5) 284.2 3,410.0 560.2 63.4 111.8 2020 $ 24,310.0 20,298.9 4,011.1 3,060.6 299.6…arrow_forward
- Sharp Uniforms designs and manufactures uniforms for corporations throughout the United States and Canada. The company's stock is traded on the NASDAQ. Selected information from the company's financial statements follows. (assume that all sales were credit sales) SHARP(in millions) Current Year Prior Year Select Income Statement Information Net revenue $ 4,556 $ 4,320 Cost of goods sold 2,643 2,533 Selling, general, and administrative expenses 1,305 1,226 Interest expense 76 74 Income tax expense 235 190 Net income 378 321 Select Statement of Cash Flows Information Cash paid for interest 67 71 Cash flows from operating activities 618 559 Select Balance Sheet Information Cash and equivalents 517 360 Marketable securities — 8 Accounts receivable 512 511 Inventories 255 246 Prepaid expense and other current assets 30 27 Accounts payable 160…arrow_forwardSharp Uniforms designs and manufactures uniforms for corporations throughout the United States and Canada. The company's stock is traded on the NASDAQ. Selected information from the company's financial statements follows. (assume that all sales were credit sales) SHARP(in millions) Current Year Prior Year Select Income Statement Information Net revenue $ 4,556 $ 4,320 Cost of goods sold 2,643 2,533 Selling, general, and administrative expenses 1,305 1,226 Interest expense 76 74 Income tax expense 235 190 Net income 378 321 Select Statement of Cash Flows Information Cash paid for interest 67 71 Cash flows from operating activities 618 559 Select Balance Sheet Information Cash and equivalents 517 360 Marketable securities — 8 Accounts receivable 512 511 Inventories 255 246 Prepaid expense and other current assets 30 27 Accounts payable 160…arrow_forwardCompare Amazon.com to Netflix Amazon.com, Inc. (AMZN) is the worlds leading Internet retailer of merchandise and media. Amazon also designs and sells electronic products, such as e-readers. Netflix, Inc. (NFLX) is one of the worlds leading Internet television networks. Both companies compete in the digital media and streaming space. However, Netflix is more narrowly focused in the digital streaming business than is Amazon. Sales and average book value of fixed assets information (in millions) are provided for Amazon and Netflix for a recent year as follows: a. Compute the fixed asset turnover ratio for each company. Round to one decimal place. b. Which company is more efficient in generating sales from fixed assets? c. Interpret your results.arrow_forward
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