As an introduction to the project, visit the corporate website for each of the companies used in this semester's Financial Reporting Project to find the annual report. The direct link is located here, but check out the main web page as well. Download the annual report PDF to your computer. Sometimes this report or link is not available (especially if many students are trying to log in at the same time, say right before the FRP project is due).

Macys Inc: go to https://www.macys.com and click investors at the very bottom of the page, then select Financial Info and the 2020 Annual Report (for the year ended 1/21).

Gap, Inc.: go to Gap Inc. - Financial Information - SEC Filings and click on the 2020 Annual Report (again, year ended 1/21).

Procedural Matters

The company websites are listed below.

Please note- NOTHING that is required for this project requires that you pay money or join anything. You are in the wrong place or looking for the wrong thing if you need a credit card!!!

As you access different resources, you will often need to search for a particular company. Usually it is easiest to search by "stock ticker." A stock ticker is an abbreviation used by stock exchanges for the company. It is a unique identifier whereas the name may be similar to other entities. The tickers can usually be found easily at one of the research sites listed below. Macys Inc is M and Gap Inc. is GPS.

The worksheets for the project are based on these annual reports and, where specifically prompted, other internet resources. Unless I specifically state otherwise, only use the 2018 annual report for Macys Inc. and Gap, Inc.

Look at the types of information available at each website. You can easily get to the annual reports by looking through the websites (see above for both Gap and Macys). Look for investor information or shareholder information and reports or annual reports. View each company's interactive annual report. READ THROUGH IT and save the PDF to your computer!!

Financial Reporting Project (FRP) #2 Macy's 2020 Macy's 2018 #DIV/0! 1. Current ratio Macy's 2019 #DIV/0! GAP 2019 #DIV/0! #DIV/0! GAP 2020 GAP 2018 #DIV/0! #DIV/0! Directions: * Use the instructions from FRP #1. *Refer to the 2020 and 2019 annual reports for these two companies to complete the questions. * You will use the 2019 annual report for 2018 values only. Sometimes prior year numbers are corrected in current-year reports, so use the most current reports. * Note: some answers have been provided to help you figure out the others. * Show the numerator and denominator of your calculations and carry your answer out to 1/10 of a %, or 3 decimal points (ie. 2300/3400 = 0.676 or 67.6%). * Use formulas where you can! * Ratio help can be found in Module 4 Macy's 2020 2. Gross margin% Macy's 2019 #DIV/0! Macy's 2018 #DIV/0! #DIV/0! GAP 2020 GAP 2019 GAP 2018 #DIV/0! #DIV/0! #DIV/0! 3. Using the current ratios calculated above, which company is more liquid in each year? 2018 2020 2019 Horizontal analysis: * A technique for evaluating a series of financial statement data over a period of time. The purpose of a horizontal analysis is to express the changes in an item in percentages, based on a specific past year chosen as the base year (2019 in this case). * Formula: Current Year Base Year Base Year X 100 4. A current ratio of less than 1 indicates which of the following? A. The company will have a hard time paying current debts. B. The company will have an easier time paying current debts. 5. Horizontal analysis: % change in sales Macy's 2020 #DIV/0! GAP 2020 #DIV/0! 6. Horizontal analysis: % change in gross margin (don't use GM % in your calculations) Macy's 2020 #DIV/0! GAP 2020 #DIV/0! 7. Horizontal analysis: % change in net income Macy's 2020 #DIV/0! GAP 2020 #DIV/0! 8. Based on questions 5-7, which company is performing better? Explain. Begin answer here: Review the balance sheet and accompanying footnotes to answer questions 9-13 (use the 2020 annual reports only and provide report page numbers). 9. Estimates. What does the company say about estimates? Name at least one account that the company has that would use estimates. Macy's: Answer found on page: Begin answer here: List account(s) here: GAP: Answer found on page: Begin answer here: List account(s) here: 10. Cost of goods sold. What items are included in costs for the company? Macy's: Answer found on page: List items here: GAP: Answer found on page: List Items here: 11. What is the advertising/marketing expense for the company? What type of advertising does the company do? Macy's: Answer found on page: 2020 advertising/marketing expense Type of advertising: GAP Answer found on page: 2020 advertising/marketing expense Type of advertising: 12. What method(s) of depreciation does the company use for financial statements? Macy's: Answer found on page: Method(s): GAP: Answer found on page: Method(s): 13. Inventory. What method does the company use to account for inventory costs? (Note: retail is a form of LIFO.) Macy's: Answer found on page: Method: GAP: Answer found on page: Method: 14. Using the cash flow statements, how much did each company invest in Property, plant, and Equipment (PP&E) in 2020? Note: PP&E is sometimes referred to as "Capital Expenditures." Remember, the numbers in these reports are truncated, so provide the actual amount. Do not include equipment leased to others. Macy's - 2020 investment in PP&E GAP-2020 investment in PP&E = 15. Locate the footnote disclosure for commitments/contingencies/leases/rent. Briefly explain what a contingency is (asset or liability?) and summarize the footnote. Macy's: Answer found on page: What a contingency is: Summary: GAP Answer found on page: What a contingency is: Summary: 16. Quarterly financial data helps readers determine the seasonality of the company's operations. Locate the quarterly data in the annual report. Comment on any major seasonal fluctuations (which quarters have the highest sales?). Macy's: Answer found on page: Seasonal fluctuations? GAP: Answer found on page: Seasonal fluctuations? GAP 17. Complete the following reconciliation for 2020 (this is just for Retained Earnings, not for total stockholders' equity). Macy's BB in R/E Plus: Net Income Less: Dividends +/- Other Ending Bal.in R/E List the "Other items that affected Retained Earnings in 2019. For Macy's: For GAP Financial Reporting Project (FRP) #2 Macy's 2020 Macy's 2018 #DIV/0! 1. Current ratio Macy's 2019 #DIV/0! GAP 2019 #DIV/0! #DIV/0! GAP 2020 GAP 2018 #DIV/0! #DIV/0! Directions: * Use the instructions from FRP #1. *Refer to the 2020 and 2019 annual reports for these two companies to complete the questions. * You will use the 2019 annual report for 2018 values only. Sometimes prior year numbers are corrected in current-year reports, so use the most current reports. * Note: some answers have been provided to help you figure out the others. * Show the numerator and denominator of your calculations and carry your answer out to 1/10 of a %, or 3 decimal points (ie. 2300/3400 = 0.676 or 67.6%). * Use formulas where you can! * Ratio help can be found in Module 4 Macy's 2020 2. Gross margin% Macy's 2019 #DIV/0! Macy's 2018 #DIV/0! #DIV/0! GAP 2020 GAP 2019 GAP 2018 #DIV/0! #DIV/0! #DIV/0! 3. Using the current ratios calculated above, which company is more liquid in each year? 2018 2020 2019 Horizontal analysis: * A technique for evaluating a series of financial statement data over a period of time. The purpose of a horizontal analysis is to express the changes in an item in percentages, based on a specific past year chosen as the base year (2019 in this case). * Formula: Current Year Base Year Base Year X 100 4. A current ratio of less than 1 indicates which of the following? A. The company will have a hard time paying current debts. B. The company will have an easier time paying current debts. 5. Horizontal analysis: % change in sales Macy's 2020 #DIV/0! GAP 2020 #DIV/0! 6. Horizontal analysis: % change in gross margin (don't use GM % in your calculations) Macy's 2020 #DIV/0! GAP 2020 #DIV/0! 7. Horizontal analysis: % change in net income Macy's 2020 #DIV/0! GAP 2020 #DIV/0! 8. Based on questions 5-7, which company is performing better? Explain. Begin answer here: Review the balance sheet and accompanying footnotes to answer questions 9-13 (use the 2020 annual reports only and provide report page numbers). 9. Estimates. What does the company say about estimates? Name at least one account that the company has that would use estimates. Macy's: Answer found on page: Begin answer here: List account(s) here: GAP: Answer found on page: Begin answer here: List account(s) here: 10. Cost of goods sold. What items are included in costs for the company? Macy's: Answer found on page: List items here: GAP: Answer found on page: List Items here: 11. What is the advertising/marketing expense for the company? What type of advertising does the company do? Macy's: Answer found on page: 2020 advertising/marketing expense Type of advertising: GAP Answer found on page: 2020 advertising/marketing expense Type of advertising: 12. What method(s) of depreciation does the company use for financial statements? Macy's: Answer found on page: Method(s): GAP: Answer found on page: Method(s): 13. Inventory. What method does the company use to account for inventory costs? (Note: retail is a form of LIFO.) Macy's: Answer found on page: Method: GAP: Answer found on page: Method: 14. Using the cash flow statements, how much did each company invest in Property, plant, and Equipment (PP&E) in 2020? Note: PP&E is sometimes referred to as "Capital Expenditures." Remember, the numbers in these reports are truncated, so provide the actual amount. Do not include equipment leased to others. Macy's - 2020 investment in PP&E GAP-2020 investment in PP&E = 15. Locate the footnote disclosure for commitments/contingencies/leases/rent. Briefly explain what a contingency is (asset or liability?) and summarize the footnote. Macy's: Answer found on page: What a contingency is: Summary: GAP Answer found on page: What a contingency is: Summary: 16. Quarterly financial data helps readers determine the seasonality of the company's operations. Locate the quarterly data in the annual report. Comment on any major seasonal fluctuations (which quarters have the highest sales?). Macy's: Answer found on page: Seasonal fluctuations? GAP: Answer found on page: Seasonal fluctuations? GAP 17. Complete the following reconciliation for 2020 (this is just for Retained Earnings, not for total stockholders' equity). Macy's BB in R/E Plus: Net Income Less: Dividends +/- Other Ending Bal.in R/E List the "Other items that affected Retained Earnings in 2019. For Macy's: For GAP