Financial Statement Analysis-Macy's Essay

2571 Words Feb 10th, 2013 11 Pages
Macy’s, Inc | Macy’s, Inc. Financial Statement Analysis 2011 | Alisa Hitchman |

11/6/2012 |

RMA INDUSTRY NUMBERS FOR RETAIL DEPARTMENT STORES
Liquidity Analysis BEST AVERAGE WORST Current Ratio 4.6 2.6 1.5 Average Collection Period 0 1 7 Day’s Inventory on Hand 36 107 136
Asset Analysis Fixed Asset Turnover 88.4 13.6 3.5 Total Asset Turnover 3.7 2.3 1.3
Debt Analysis Debt/Worth Ratio 0.4 1.4 3.9 TIE Ratio 8.3 3.1 1.3 Day’s Payable 8 31 42
Profitability Analysis PRE TAX Profit Margin NA 10.7 NA PRE TAX ROE 38.7 14.3 5.9 PRE TAX ROA 18.1 4.6 3.0

Introduction
Macy’s, Inc. is a chain of department stores in the U.S. that has 800
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The reason for this is due to common sized current assets of 39.7 being 42% below the average of the industry at 68.2 while common size current liabilities of 28.3% is only 1.7% below the RMA common size of 29.1%.
Average Collection Period RMA
’11 ’10 % Change Best Average Worst
6 days 5 days 20 % 0 days 1 day 7 days
The average collection period of Macy’s increased 20% from 5 days to 6. This is due to an 8.9% increase in accounts receivable and despite a 5.6% increase in sales. At 6 days, Macy’s average collection period is 500% worse than the industry average of 1 day but 14% better than the RMA worst of 7 days. It is worse this average despite the fact that accounts receivables is just 1.7% and is 22.7% lower than the 2.2% of the common size RMA. Therefore, Macy’s has less credit sales but takes a longer time to collect them.

Day’s Inventory on Hand RMA
’11 ’10 % Change Best Average Worst
118 days 115 days 1.7 % 36 days 107 days 136 days
Macy’s days of inventory on hand increased 1.7% from 115 days to 118 days. This is due to a 7.5% increase in inventory and despite a 6.2% increase in cost of goods sold. At 118days this is 10.2% worse the industry average of 107 days and even 13.2% better than the industry worst which is 136 days. Is is longer than average because of cost of goods sold of 59.6% is 5.2% less than the RMA common size of 62.9% and despite the company’s common size inventory of 23.2% being 43.8%