P2-50. Compare Cash Flows Across Retailers Following are selected accounts from the income statement and the statement of cash flows for several retailers, for their fiscal years ended in 2018. Cash Flows from Net $ millions Sales Income Operating Investing Financing $ 25,739 $ 1,108 108,203 $ 1,735 13,038 Macy's...... Home Depot Best Buy Target... $ (456) (2,416) 508 (3,416) (24,036) $ (1,544) (12,420) (2,018) (3,644) (2,537) 11,121 .... .. 42,879 75,356 511,729 1,464 2,937 6,670 2,408 5,973 ..... Walmart Stores.. 27,753 Required a. Compute the ratio of net income to sales for each company. Rank the companies on the basis of this ratio. Do their respective business models give insight into these differences? b. Compute net cash flows from operating activities as a percentage of sales. Rank the companies on the basis of this ratio. Does this ranking coincide with the ratio rankings from part a? Suggest one or more reasons for any differences observed. c. Compute net cash flows from investing activities as a percentage of sales. Rank the companies on the basis of this ratio. Does this ranking coincide with the ratio rankings from part a? Suggest one or more reasons for any differences observed.

P2-50. Compare Cash Flows Across Retailers Following are selected accounts from the income statement and the statement of cash flows for several retailers, for their fiscal years ended in 2018. Cash Flows from Net $ millions Sales Income Operating Investing Financing $ 25,739 $ 1,108 108,203 $ 1,735 13,038 Macy's...... Home Depot Best Buy Target... $ (456) (2,416) 508 (3,416) (24,036) $ (1,544) (12,420) (2,018) (3,644) (2,537) 11,121 .... .. 42,879 75,356 511,729 1,464 2,937 6,670 2,408 5,973 ..... Walmart Stores.. 27,753 Required a. Compute the ratio of net income to sales for each company. Rank the companies on the basis of this ratio. Do their respective business models give insight into these differences? b. Compute net cash flows from operating activities as a percentage of sales. Rank the companies on the basis of this ratio. Does this ranking coincide with the ratio rankings from part a? Suggest one or more reasons for any differences observed. c. Compute net cash flows from investing activities as a percentage of sales. Rank the companies on the basis of this ratio. Does this ranking coincide with the ratio rankings from part a? Suggest one or more reasons for any differences observed.

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 21E

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