Analyze and compare Amazon.com, Best Buy, and Walmart The condensed income statements through operating income for Amazon.com, Inc. (AMZN), Best Buy Co., Inc. (BBY), and Walmart Inc. (WMT) for a recent fiscal year follow (in millions): Line Item Description Amazon Best Buy Walmart Sales $280,522 $43,638 $523,964 Cost of sales (165,536) (33,590) (394,605) Gross profit $114,986 $10,048 $129,359 Selling, general, and administrative expenses (100,244) (7,998) (108,791) Operating expenses (201) (41) 0 Operating income $14,541 $2,009 $20,568 Question Content Area 1. Prepare comparative common-sized income statements for each company. Round percentages to one decimal place. If percentages is zero, enter "0". For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300) Comparative Income statements Line Item Description Amazon Best Buy Walmart Sales Sales% Sales% Sales% Cost of sales Cost of sales% Cost of sales% Cost of sales% Gross profit Gross profit% Gross profit% Gross profit% Selling, general, and administrative expenses Selling, general, and administrative expenses% Selling, general, and administrative expenses% Selling, general, and administrative expenses% Operating expenses Operating expenses% Operating expenses% Operating expenses% Operating income Operating income% Operating income% Operating income% Question Content Area 2. Use the common-sized analysis to compare the financial performance of the three companies. fill in the blank 1 of 7 has the highest gross profit and operating income on a percentage basis. fill in the blank 2 of 7 has a lower gross profit than fill in the blank 3 of 7 on a percentage basis, but generates a very strong operating income that is much closer to fill in the blank 4 of 7 on a percentage basis. This is consistent with the company’s business strategy, in that it seeks to sell a large quantity of items at a very low margin. Comparatively, fill in the blank 5 of 7 has gross profit similar to fill in the blank 6 of 7 on a percentage basis but much smaller in terms of total dollars. This reflects a decreasing margin on the product mix sold by fill in the blank 7 of 7

Analyze and compare Amazon.com, Best Buy, and Walmart The condensed income statements through operating income for Amazon.com, Inc. (AMZN), Best Buy Co., Inc. (BBY), and Walmart Inc. (WMT) for a recent fiscal year follow (in millions): Line Item Description Amazon Best Buy Walmart Sales $280,522 $43,638 $523,964 Cost of sales (165,536) (33,590) (394,605) Gross profit $114,986 $10,048 $129,359 Selling, general, and administrative expenses (100,244) (7,998) (108,791) Operating expenses (201) (41) 0 Operating income $14,541 $2,009 $20,568 Question Content Area 1. Prepare comparative common-sized income statements for each company. Round percentages to one decimal place. If percentages is zero, enter "0". For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300) Comparative Income statements Line Item Description Amazon Best Buy Walmart Sales Sales% Sales% Sales% Cost of sales Cost of sales% Cost of sales% Cost of sales% Gross profit Gross profit% Gross profit% Gross profit% Selling, general, and administrative expenses Selling, general, and administrative expenses% Selling, general, and administrative expenses% Selling, general, and administrative expenses% Operating expenses Operating expenses% Operating expenses% Operating expenses% Operating income Operating income% Operating income% Operating income% Question Content Area 2. Use the common-sized analysis to compare the financial performance of the three companies. fill in the blank 1 of 7 has the highest gross profit and operating income on a percentage basis. fill in the blank 2 of 7 has a lower gross profit than fill in the blank 3 of 7 on a percentage basis, but generates a very strong operating income that is much closer to fill in the blank 4 of 7 on a percentage basis. This is consistent with the company’s business strategy, in that it seeks to sell a large quantity of items at a very low margin. Comparatively, fill in the blank 5 of 7 has gross profit similar to fill in the blank 6 of 7 on a percentage basis but much smaller in terms of total dollars. This reflects a decreasing margin on the product mix sold by fill in the blank 7 of 7

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 1MAD

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Line Item Description	Amazon	Best Buy	Walmart
Sales	$280,522	$43,638	$523,964
Cost of sales	(165,536)	(33,590)	(394,605)
Gross profit	$114,986	$10,048	$129,359
Selling, general, and administrative expenses	(100,244)	(7,998)	(108,791)
Operating expenses	(201)	(41)	0
Operating income	$14,541	$2,009	$20,568

Question Content Area

1. Prepare comparative common-sized income statements for each company. Round percentages to one decimal place. If percentages is zero, enter "0". For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300)

Comparative Income statements

Line Item Description	Amazon	Best Buy	Walmart
Sales	Sales%	Sales%	Sales%
Cost of sales	Cost of sales%	Cost of sales%	Cost of sales%
Gross profit	Gross profit%	Gross profit%	Gross profit%
Selling, general, and administrative expenses	Selling, general, and administrative expenses%	Selling, general, and administrative expenses%	Selling, general, and administrative expenses%
Operating expenses	Operating expenses%	Operating expenses%	Operating expenses%
Operating income	Operating income%	Operating income%	Operating income%

Question Content Area

2. Use the common-sized analysis to compare the financial performance of the three companies.

fill in the blank 1 of 7

has the highest gross profit and operating income on a percentage basis. fill in the blank 2 of 7

has a lower gross profit than fill in the blank 3 of 7

on a percentage basis, but generates a very strong operating income that is much closer to fill in the blank 4 of 7

on a percentage basis. This is consistent with the company’s business strategy, in that it seeks to sell a large quantity of items at a very low margin. Comparatively, fill in the blank 5 of 7

has gross profit similar to fill in the blank 6 of 7

on a percentage basis but much smaller in terms of total dollars. This reflects a decreasing margin on the product mix sold by fill in the blank 7 of 7

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