Income Statement Analysis

This weeks DQ focuses on the Income Statement. It builds on the insights we gained in Week 2, but goes a little deeper in our use of financial statement analysis skills.

1. Locate an actual Income Statement from the latest fiscal year for one of the following companies:
   • Sears
   • Tesla
2. Pick an Income Statement Line Item or Ratio from the list below:

Line Item	Ratio
Revenue (aka Sales, Turnover) Cost of Goods Sold/Cost of Sales Salary Expense Selling, General and Administrative Expense Gross Profit Operating Profit Net Profit	Gross Margin (%) Net Margin (%) Salary Expense as % of Sales Return on Sales Return on Equity Return on Assets Earnings Per Share (EPS) EBITDA

3. What does this line item or ratio measure and why is it important item for Management to understand this number?
4. Identify the past 4 years of amounts for your line item or ratio (Note: this will require you to track down additional historical Income Statements to get the older data). Share this data with the class using a data table or chart.
5. Answer the following questions:
   • What is the trend for this line item or ratio?
   • Has the line item or ratio amount increased or decreased?
   • Is this a good thing or a bad thing? For this company?
   • What might management do to improve this line item or ratio?

Has the line item or ratio amount increase or decrease?

Is this a "good" thing or bad" thing? For this company?

What might management do to improve this line item or ratio?