Financial Ratio Analysis Of Gamestop Corp

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Financial Ratio Analysis of GameStop Corp By Tonia Stanton FINC 440 6380 Security Analysis and Valuation Professor William Marcoux January 16, 2015 Financial Ratio Analysis of GameStop Corp Introduction GameStop Corp, is a global video game and consumer electronics retailer with emphasis on video gaming lifestyle. Number one in the industry, GameStop stores sell new and used consumer electronics, which includes videogame and consoles, computer software, Apple product, cellular merchandise and accept trade-ins of the same. The Company is divided into four Video Game Brands segments (United States, Canada, Australia and Europe) and a Technology Brand segment that publicly report financial results. The video game segment include…show more content…
GameStop Liquidity Ratios (in millions) 2010 2011 2012 2013 2014 Current Ratio 1.28 1.23 1.22 1.17 1.13 Quick Ratio .59 .44 .44 .41 .36 WC to Sale Ratio 0.052 0.043 0.038 0.033 0.024 GameStop’s liquidity ratios have been decreasing for the past five years. The ratios are low which indicates their inability to meet short term obligations. They may have inventory management issues, uncollected receivable or spending too much cash. Profitability ratio Profitability ratios analyze part of income with sales. It tell us how a company generates income vs. sales. Profitability is simply the capacity to make a profit, and a profit is what is left over from income earned after you have deducted all costs and expenses related to earning the income. Can GameStop make a profit? Gross profit margin, operating profit margin and net profit margin are some commonly used ratios. GameStop’s Profit Ratio with Industry Average 2010 2011 2012 2013 2014 Industry average Gross profit margin 26.89% %26.79$ 28.06% 29.84% 29.44% 35.20% Operating profit margin 7.02% 6.99% 5.94% -0.47% 6.34% 10.36% Net profit margin 4.15% 4.31% 3.56% -3.03% 3.91% 6.05% 2013 was a bad year for GameStop with a negative operating cost and net profit. Over a five year period, their gross profit margin has increased. Which indicate how well GameStop is performing at generating profits or revenues relative to a certain metric. The
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