Comparing of Financial Statement for Similar Companies

4998 Words Mar 18th, 2013 20 Pages
Introduction
Freds, Belk, Big Lots and Dollar Tree are all famous variety store in United State. All of them provide various and qualified goods to customers. This analysis report, discussing different financial data based on the 10-K document of the four companies, wants to give readers a meaningful describe to these companies so investors can have clear opinions to help decide.

Company Profiles
Freds, Inc. (Freds) is to meet the general merchandise and pharmacy needs of the small - to medium- sized towns it serves by offering a wider variety of quality merchandise and a more attractive price-to-value relationship than either drug stores or smaller variety/dollar stores and a shopper-friendly format which is more convenient
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Freds values inventories at the lower of cost or market using the retail first -in, first-out method for goods in stores and the cost first -in, first-out method for goods in our distribution centers. And the rest of three companies values inventories at the lower of cost or market using the average cost retail inventory method. Under the average cost retail inventory method, inventory is segregated into departments of merchandise having similar characteristics at its current retail selling value.

Profitability, Liquidity/Solvency (see Exhibit 2)
If we analyze the current ratio and quick ratio they are relatively small. So paying the short term debts might be a problem for the company as well as the liquidity is getting decreased from year 2010 – 2012 as 1.43 to 1.23 to 0.88. So it might be difficult for the company to stay with the current obligations. If we analyze the debt -equity ratio seems to be in high end for the Belk, but it is gradually decreasing 1.36, 1.06 to 1.03. This seems to be a good sign for the company. But still the ratio is high and need quite bit of work to get it down to an acceptable value.
Freds’ ROE keeps a increase from 5.99% in 2010, to 7.17% in 2011 then to 7.89% in 2012

because its profit margin increasing from 1.32% to 1.61% and 1.78%, respectively in 2011 and
2012, in the same time, its assets turnover keeps a steadily level from 3.20 to 3.06, just a slightly decrease. Additionally, the gross margin just has a
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