Using the financial ratios formulas attached in this week's activity and the financial statement information for Macy's, Inc. calculate and explain the following ratios for Macy's for both 2015 and 2016. Based on these ratios, did Macy's financial performance improve, weaken, or remain about the same from 2015 to 2016? A. Gross profit margin B. Net profit margin C. Return on shareholders' equity D. Return on assets E. Days of inventory F. Inventory turnover ratio G. Average collection period Part 1 Section B: Core Concepts and Analytical Tools Consolidated Statements of Income for Macy's, Inc., 2015-2016 (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 Interest expense (367) (363) Premium on early retirement of debt - Interest income Income before Income taxes Federal, state, and local income tax expense 4 952 2 1,678 (341) (608) Net income 611 1,070 Net loss attributable to noncontrolling interest 8 2 Net income attributable to Macy's, Inc., shareholders 619 1,072 Basic earnings per share attributable to Macy's, Inc., shareholders Diluted earnings per share attributable to Macy's, Inc., shareholders $ 2.01 $ 3.26 $ 1.99 $ 3.22 Consolidated Balance Sheets for Macy's, Inc., 2015-2016 (in millions) ASSETS Current Assets: 2016 2015 $ 1,297 $ 1,109 Cash and cash equivalents Receivables Merchandise inventorles 522 5,399 558 5,506 Prepaid expenses and other current assets Total Current Assets 408 479 7,626 7,652 Property and Equipment - net 7,017 7,616 Goodwill 3,897 3,897 Other Intangible Assets - net 498 514 Other Assets 813 897 Total Assets $19,851 $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 n Chapter 4 Evaluating a Company's Resources, Capabilities, and Competitiveness 85 2016 2015 Shareholders' Equity: Common stock (304.1 and 310.3 shares outstanding) Additional paid-in capital 3 3 617 621 Accumulated equity 6,088 6,334 Treasury stock (1,489) (1,665) Accumulated other comprehensive loss (896) (1,043) Total Macy's, Inc., Shareholders' Equity 4,323 4,250 Noncontrolling interest (1) 3 Total Shareholders' Equity 4,322 Total Liabilities and Shareholders' Equity $19,851 4,253 $20,576 Source: Macy's, Inc., 2016 10-K. 2. REI operates more than 140 sporting goods and outdoor recreation stores in 36 states. How many of the four tests of the competitive power of a resource does the retail store network pass? Explain your answer. LO4-2