ASSURANCE OF LEARNING EXERCISES LO4 Using the financial ratios provided in the Appendix and the following financial statement information for Macy's, Inc., calculate the following ratios for Macy's for both 2015 and 2016. 1. Gross profit margin 2. Operating profit margin 3. Net profit margin 4. Times interest earned coverage 5. Return on shareholders' equity 6. Return on assets 7. Long-term debt-to-equity ratio 8. Days of inventory 9. Inventory turnover ratio 10. Average collection period Based on these ratios, did Macy's financial performance improve, weaken, or remain about the same from 2015 to 2016? Consolidated Statements of Income for Macy's, Inc., 2015-2016 (in millions, except per share amounts) 2016 $25,778 (15,621) 10,157 (8,265) (479) 2015 $27,079 (16,496) 10,583 (8,256) (288) 198) 1,315 (367) 2,039 (363) Net sales Cost of sales Gross margin Selling, general and administrative expenses Impairments, store closing and other costs Settlement charges Operating income Interest expense Premium on early retirement of debt Interest income Income before income taxes Federal, state, and local income tax expense Net income Net loss attributable to noncontrolling interest Net income attributable to Macy's, Inc., shareholders Basic earnings per share attributable to Macy's, Inc., shareholders Diluted earnings per share attributable to Macy's, Inc., shareholders 952 (341) 611 1,678 (608) 1,070 619 $ 2.01 $ 1.99 $ $ 1,072 3.26 3.22 Consolidated Balance Sheets for Macy's, Inc., 2015-2016 (in millions) 2016 2015 $ 1,297 522 5,399 $ 1,109 558 5,506 479 7,652 7,616 ASSETS Current Assets: Cash and cash equivalents Receivables Merchandise inventories Prepaid expenses and other current assets Total Current Assets Property and Equipment - net Goodwill Other Intangible Assets-net Other Assets Total Assets LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilties: Short-term debt Merchandise accounts payable Accounts payable and accrued liabilities Income taxes Total Current Liabilities Long-Term Debt Deferred Income Taxes Other Liabilities 408 7,626 7,017 3,897 498 813 $19,851 3,897 514 897 $20,576 $309 1,423 3,563 352 5,647 6,562 1,443 1,877 $642 1,526 3,333 227 5,728 6,995 1,477 2,123 Chapter 4 Evaluating a Company's Resources, Capabilities, and Comp 2016 2015 Shareholders' Equity: Common stock (304.1 and 310.3 shares outstanding) Additional paid-in capital Accumulated equity Treasury stock Accumulated other comprehensive loss Total Macy's, Inc., Shareholders' Equity Noncontrolling interest Total Shareholders' Equity Total Liabilities and Shareholders' Equity 617 6,088 (1,489) (896) 4,323 621 6,334 (1,665) (1,043) 4,250 4,322 $19,851 4,253 $20,576 Source: Macy's, Inc., 2016 10-K. PEL operates more than 140 sporting goods and outdoor recreation stores in 36 states. LO4