1. 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, L04-13 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? Page 84 Consolidated Statements of income for Macy's, Inc., 20152016 (in millions, except per share amounts) 2016 2015 Net sales $ 25,778 $ 27,079 Cost of sales (15,621) (16,496) Gross margin 10,157 10,583 Selling, general and administrative expenses (8.265) (8,256) Impairments, store closing and other costs (479) (288) Settlement charges (98) Operating income 1.315 2,039 (367) (363) Interest expense Premium on early retirement of debt 4 Interest income 952 1.678 Income before income taxes (608) Federal, state, and local income tax expense 611 1,070 Net income Net Income 611 1.070 2 619 1.072 Not loss attributable to moncontrolling interest Net income attributable to Macy's. Inc., shareholders Basic earnings per share atributable to Macy's, Inc., shareholders Diluted earnings per share attributable to Macy's, Inc, shareholders 5201 S 3:26 s 1.99 s 3.22 Consolidated Balance Sheets for Macy's, Inc., 2015-2016 (in millions) ASSETS 2016 2015 Current Assets: Cash and cash equivalents $ 1,297 $ 1,109 Receivables 522 558 5,399 5.506 408 479 Merchandise inventories Prepaid expenses and other current assets Total Current Assets Property and Equipment - net 7.626 7,652 7,017 7.616 Goodwill 3.897 3.897 498 Other Intangible Assets - net 514 Other Assets 813 897 Total Assets $ 19,851 S 20.576 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilties: Short-term debt $309 $642 Merchandise accounts payable 1,423 1.526 Accounts payable and accrued liabilities 3,563 3,333 Income taxes 352 227 Total Current Liabilities 5,647 5.728 Long-Term Debt 6,562 6,995 Deferred Income Taxes 1,443 1.477 Other Liabilities 1,877 2.123 Shareholders' Equity: Common stock (304.1 and 310,3 shares outstanding) 3 3 Additional paid-in capital 617 621 6,088 Accumulated equity 6,334 Treasury stock (1.489) (1.665) (896) (1.043) Accumulated other comprehensive loss Additional paid-in capital 617 621 Accumulated equity 6,088 6.334 Treasury stock (1,489) (1.665) Accumulated other comprehensive loss (896) (1,043) 4.323 4.250 Total Macy's, Inc., Shareholders' Equity Noncontrolling interest (1) 3 Total Shareholders' Equity 4,322 4.253 Total Liabilities and Shareholders' Equity S 19.851 $ 20.576 Source: Macy's, Inc. 2016 10-K
