In other words, based on your analysis of the spreadsheet, what is your opinion of Williams Sonomas Profitability? Their liquidity? Their Solvency? Has it increased or decreased over the three-year period that you are analyzing? Please do not rewrite all of the ratios in your interpretation but rather explain what the various ratios mean for the profitability, liquidity and solvency of the company. Each analysis listed below should be analyzed/interpreted in a separate paragraph(s)
What additional information do you suggest could influence the investment decision based on your research of the company? Perhaps you can read the most recent financial statements, or considering our current situation, think about how is COVID-19 impacting a business like Williams Sonoma? (10 points)
Your informed recommendation (to invest or not) about Williams Sonoma, with justifications. What is your general impression of Williams Sonoma? Support your conclusion (15 points)
Williams Sonoma Inc (NYS: WSM) As Reported Annual Balance Sheet Vertical Analysis 2018 0.1 0.1 2018 338,954 107,102 1,124,992 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 2016 213,713 88,803 977,505 23,625 52,882 10,652 1,367,180 923,283 135,238 51,178 2,476,879 453,710 130,187 294,276 23,245 59,838 961,256 196,188 0.1 0.1 0.1 0.1 0.1 0.1 Report Date Cash & cash equivalents Accounts receivable, net Merchandise inventories, net Prepaid catalog expenses Prepaid expenses Other assets Total current assets Property & equipment, net Deferred income taxes, net Other assets, net Total assets Accounts payable Accrued expenses Deferred revenue Income taxes payable Other current liabilities Total current liabilities Deferred rent & lease incentives Long-term debt Other long-term obligations Total liabilities Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Treasury stock, at cost Total stockholders' equity 0.1 2017 390,136 90,119 1,061,593 24,028 58,693 11,876 1,636,445 932,283 67,306 149,715 2,785,749 459,378 135,884 292,460 56,783 63,318 1,007,823 202,134 299,422 72,804 1,582,183 837 562,814 647,422 (6,782) (725) 1,203,566 101,356 21,939 1,694,343 929,635 44,055 144,811 2,812,844 526,702 163,559 290,445 21,461 72,645 1,074,812 201,374 299,620 81,324 1,657,130 789 581,900 584,333 (11,073) (235) 1,155,714 12.1% 3.8% 40.0% 0.0% 3.6% 0.8% 60.2% 33.0% 1.6% 5.1% 100.0% 18.7% 5.8% 10.3% 0.8% 2.6% 38.2% 7.2% 10.7% 2.9% 58.9% 0.0% 20.7% 20.8% -0.4% 0.0% 41.1% Vertical Analysis 2017 14.0% 3.2% 38.1% 0.9% 2.1% 0.4% 58.7% 33.5% 2.4% 5.4% 100.0% 16.5% 4.9% 10.5% 2.0% 2.3% 36.2% 7.3% 10.7% 2.6% 56.8% 0.0% 20.2% 23.2% -0.2% 0.0% 43.2% 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 71,215 1,228,659 873 556,928 701,702 (9,903) (1,380) 1,248,220 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 2.7 2.7 2.7 Williams Sonoma Inc (NYS: WSM) As Reported Annual Income Statement 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Horizontal Analysis (2018-2017) 10.9% 3.0% 7.2% 6.2% 8.8% 12.7% -3.9% 388.8% -5.1% -50.5% 28.6% 0.1 0.1 0.1 Report Date E-commerce net revenues Retail net revenues Net revenues Cost of goods sold Gross profit Selling, general & administrative expenses Operating income Interest income (expense), net Earnings (loss) before income taxes Income taxes Net earnings (loss) Horizontal Analysis (2017-2016) 5.5% 2.6% 4.1% 5.0% 2.6% 4.8% -4.0% 99.4% -4.1% 15.8% -15.0% 2018 2017 3,082,064 2,778,457 2,589,5292,513,902 5,671,593 5,292,359 3,570,580 3,360,648 2,101,013 1,931,711 1,665,060 1,477,900 435,953 453,811 (6,706) (1,372) 429,247 452,439 95,563 192,894 333,684 259,545 0.1 0.1 0.1 0.1 2016 2,633,602 2,450,210 5,083,812 3,200,502 1,883,310 1,410,711 472,599 (688) 471,911 166,524 305,387 Vertical Analysis 2018 54.3% 45.7% 100.0% 63.0% 37.0% 29.4% 7.7% -0.1% 7.6% 1.7% 5.9% Vertical Analysis 2017 52.5% 47.5% 100.0% 63.5% 36.5% 27.9% 8.6% 0.0% 8.5% 3.6% 4.9% 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 1.1 1.1 1.1 1.1 1.1 1.1 As Reported Annual Cash Flow 2018 333,684 188,808 10,209 (26,199) 23,639 2017 259,545 183,077 1,889 (25,372) 63,381 2016 305,387 173,195 3,806 (25,212) 7,114 3,230 (4,894) 51,116 (423) 59,802 (579) 42,988 (135) (15,329) (70,331) Report Date Net earnings Depreciation & amortization Loss (gain) on disposal or impairment of assets Amortization of deferred lease incentives Deferred income taxes Tax benefit related to stock-based awards Excess tax benefit related to stock-based awards Stock-based compensation expense Other adjustments Changes in: Accounts receivable Merchandise inventories Prepaid catalog expenses Prepaid expenses & other assets Accounts payable Accrued expenses & other liabilities Deferred revenue Deferred rent & lease incentives Income taxes payable Net cash flows from operating activities Purchases of property & equipment Acquisition of Outward, Inc., net of cash received Other cash flows from investing activities Net cash flows from investing activities Proceeds from issuance of long-term debt Repurchase of common stock Borrowings under revolving line of credit Repayments of borrowings under revolving line of credit Payment of dividends Tax withholdings related to stock-based awards Excess tax benefit related to stock-based awards Net proceeds related to stock-based awards Debt issuance costs Other cash flows from financing activities Net cash flows from financing activities Effect of exchange rates on cash & cash equivalents Net increase (decrease) in cash & cash equivalents Cash & cash equivalents at beginning of year Cash & cash equivalents at end of year Cash paid during the year for interest Cash paid (received) during the year for income taxes, net of refunds (54,691) 62,377 45,976 38,899 24,929 (35,208) 585,986 (190, 102) 149 (80,235) (403) (16,092) 2,382 9,157 (2,394) 28,226 33,541 499,704 (189,712) (80,528) 480 (269,760) 300,000 (196,179) 170,000 (170,000) (135,010) (18,130) (9,794) 4,493 5,294 (6,367) 3,169 25,876 (3,037) 35,559 (43,803) 524,709 (197,414) 2,203 (187,899) 439 (196,975) (295,304) 60,000 (60,000) (140,325) (14,437) (151,272) 125,000 (125,000) (133,539) (27,062) 4,894 1,532 (450,066) 797 (51,182) 390,136 338,954 11,424 107,951 (1,191) (1,197) (51,707) (1,814) 176,423 213,713 390,136 2,915 99,062 (359) (305,806) (1,862) 20,066 193,647 213,713 2,202 203,426 LIQUIDITY 0.5 0.5 0.5 Working Capital Current Ratio Inventory Turnover Days Sales in Inventory Accounts Receivable Turnover Average Collection Period 619531 1.58 3.27 111.76 57.52 0.5 0.5 628622 1.62 3.30 110.73 59.16 6.17 0.5 0.5 0.5 0.5 0.5 6.35 0.5 PROFITABILITY 2.03 0.12 0.06 0.5 0.5 0.5 0.37 Total Asset Turnover Return on Assets Profit Margin Gross Profit Rate Return on Equity Earnings per Share (EPS) Price/Earnings Ratio Dividend Payout Ratio 2.01 0.10 0.05 0.36 0.21 3.03 17.61 0.52 orano con con 0.28 4.10 13.18 0.42 0.5 0.5 0.5 0.5 SOLVENCY 0.5 Debt to Assets Ratio Times Interest Earned Free Cash Flow 0.59 65.01 255559.00 0. 5 0.5 0.57 330.77 174982.00 0.5 0.5 0.5 ADDITIONAL INFORMATION Weighted average shares outstanding - basic Market Price per Share at Year End 81,420 54.00 85,592 53.41 $ $ 8.5 8.5 8.5 8.5 Williams Sonoma Inc (NYS: WSM) As Reported Annual Balance Sheet Vertical Analysis 2018 0.1 0.1 2018 338,954 107,102 1,124,992 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 2016 213,713 88,803 977,505 23,625 52,882 10,652 1,367,180 923,283 135,238 51,178 2,476,879 453,710 130,187 294,276 23,245 59,838 961,256 196,188 0.1 0.1 0.1 0.1 0.1 0.1 Report Date Cash & cash equivalents Accounts receivable, net Merchandise inventories, net Prepaid catalog expenses Prepaid expenses Other assets Total current assets Property & equipment, net Deferred income taxes, net Other assets, net Total assets Accounts payable Accrued expenses Deferred revenue Income taxes payable Other current liabilities Total current liabilities Deferred rent & lease incentives Long-term debt Other long-term obligations Total liabilities Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Treasury stock, at cost Total stockholders' equity 0.1 2017 390,136 90,119 1,061,593 24,028 58,693 11,876 1,636,445 932,283 67,306 149,715 2,785,749 459,378 135,884 292,460 56,783 63,318 1,007,823 202,134 299,422 72,804 1,582,183 837 562,814 647,422 (6,782) (725) 1,203,566 101,356 21,939 1,694,343 929,635 44,055 144,811 2,812,844 526,702 163,559 290,445 21,461 72,645 1,074,812 201,374 299,620 81,324 1,657,130 789 581,900 584,333 (11,073) (235) 1,155,714 12.1% 3.8% 40.0% 0.0% 3.6% 0.8% 60.2% 33.0% 1.6% 5.1% 100.0% 18.7% 5.8% 10.3% 0.8% 2.6% 38.2% 7.2% 10.7% 2.9% 58.9% 0.0% 20.7% 20.8% -0.4% 0.0% 41.1% Vertical Analysis 2017 14.0% 3.2% 38.1% 0.9% 2.1% 0.4% 58.7% 33.5% 2.4% 5.4% 100.0% 16.5% 4.9% 10.5% 2.0% 2.3% 36.2% 7.3% 10.7% 2.6% 56.8% 0.0% 20.2% 23.2% -0.2% 0.0% 43.2% 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 71,215 1,228,659 873 556,928 701,702 (9,903) (1,380) 1,248,220 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 2.7 2.7 2.7 Williams Sonoma Inc (NYS: WSM) As Reported Annual Income Statement 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Horizontal Analysis (2018-2017) 10.9% 3.0% 7.2% 6.2% 8.8% 12.7% -3.9% 388.8% -5.1% -50.5% 28.6% 0.1 0.1 0.1 Report Date E-commerce net revenues Retail net revenues Net revenues Cost of goods sold Gross profit Selling, general & administrative expenses Operating income Interest income (expense), net Earnings (loss) before income taxes Income taxes Net earnings (loss) Horizontal Analysis (2017-2016) 5.5% 2.6% 4.1% 5.0% 2.6% 4.8% -4.0% 99.4% -4.1% 15.8% -15.0% 2018 2017 3,082,064 2,778,457 2,589,5292,513,902 5,671,593 5,292,359 3,570,580 3,360,648 2,101,013 1,931,711 1,665,060 1,477,900 435,953 453,811 (6,706) (1,372) 429,247 452,439 95,563 192,894 333,684 259,545 0.1 0.1 0.1 0.1 2016 2,633,602 2,450,210 5,083,812 3,200,502 1,883,310 1,410,711 472,599 (688) 471,911 166,524 305,387 Vertical Analysis 2018 54.3% 45.7% 100.0% 63.0% 37.0% 29.4% 7.7% -0.1% 7.6% 1.7% 5.9% Vertical Analysis 2017 52.5% 47.5% 100.0% 63.5% 36.5% 27.9% 8.6% 0.0% 8.5% 3.6% 4.9% 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 1.1 1.1 1.1 1.1 1.1 1.1 As Reported Annual Cash Flow 2018 333,684 188,808 10,209 (26,199) 23,639 2017 259,545 183,077 1,889 (25,372) 63,381 2016 305,387 173,195 3,806 (25,212) 7,114 3,230 (4,894) 51,116 (423) 59,802 (579) 42,988 (135) (15,329) (70,331) Report Date Net earnings Depreciation & amortization Loss (gain) on disposal or impairment of assets Amortization of deferred lease incentives Deferred income taxes Tax benefit related to stock-based awards Excess tax benefit related to stock-based awards Stock-based compensation expense Other adjustments Changes in: Accounts receivable Merchandise inventories Prepaid catalog expenses Prepaid expenses & other assets Accounts payable Accrued expenses & other liabilities Deferred revenue Deferred rent & lease incentives Income taxes payable Net cash flows from operating activities Purchases of property & equipment Acquisition of Outward, Inc., net of cash received Other cash flows from investing activities Net cash flows from investing activities Proceeds from issuance of long-term debt Repurchase of common stock Borrowings under revolving line of credit Repayments of borrowings under revolving line of credit Payment of dividends Tax withholdings related to stock-based awards Excess tax benefit related to stock-based awards Net proceeds related to stock-based awards Debt issuance costs Other cash flows from financing activities Net cash flows from financing activities Effect of exchange rates on cash & cash equivalents Net increase (decrease) in cash & cash equivalents Cash & cash equivalents at beginning of year Cash & cash equivalents at end of year Cash paid during the year for interest Cash paid (received) during the year for income taxes, net of refunds (54,691) 62,377 45,976 38,899 24,929 (35,208) 585,986 (190, 102) 149 (80,235) (403) (16,092) 2,382 9,157 (2,394) 28,226 33,541 499,704 (189,712) (80,528) 480 (269,760) 300,000 (196,179) 170,000 (170,000) (135,010) (18,130) (9,794) 4,493 5,294 (6,367) 3,169 25,876 (3,037) 35,559 (43,803) 524,709 (197,414) 2,203 (187,899) 439 (196,975) (295,304) 60,000 (60,000) (140,325) (14,437) (151,272) 125,000 (125,000) (133,539) (27,062) 4,894 1,532 (450,066) 797 (51,182) 390,136 338,954 11,424 107,951 (1,191) (1,197) (51,707) (1,814) 176,423 213,713 390,136 2,915 99,062 (359) (305,806) (1,862) 20,066 193,647 213,713 2,202 203,426 LIQUIDITY 0.5 0.5 0.5 Working Capital Current Ratio Inventory Turnover Days Sales in Inventory Accounts Receivable Turnover Average Collection Period 619531 1.58 3.27 111.76 57.52 0.5 0.5 628622 1.62 3.30 110.73 59.16 6.17 0.5 0.5 0.5 0.5 0.5 6.35 0.5 PROFITABILITY 2.03 0.12 0.06 0.5 0.5 0.5 0.37 Total Asset Turnover Return on Assets Profit Margin Gross Profit Rate Return on Equity Earnings per Share (EPS) Price/Earnings Ratio Dividend Payout Ratio 2.01 0.10 0.05 0.36 0.21 3.03 17.61 0.52 orano con con 0.28 4.10 13.18 0.42 0.5 0.5 0.5 0.5 SOLVENCY 0.5 Debt to Assets Ratio Times Interest Earned Free Cash Flow 0.59 65.01 255559.00 0. 5 0.5 0.57 330.77 174982.00 0.5 0.5 0.5 ADDITIONAL INFORMATION Weighted average shares outstanding - basic Market Price per Share at Year End 81,420 54.00 85,592 53.41 $ $ 8.5 8.5 8.5 8.5
