Question
You are a management consultant and was commissioned by Macys Department Store to review its profitability for the past 3-years. You are tasked with reviewing
You are a management consultant and was commissioned by Macys Department Store to review its profitability for the past 3-years. You are tasked with reviewing Macys net profit margin for FY 2019, 2018, and 2017. Macys management wants recommendations to improve its profitability. Below are the financial statements for Macys Department Store.
FY 2019 View Filing Data (sec.gov)
FY 2018 View Filing Data (sec.gov)
FY 2017 View Filing Data (sec.gov)
| Consolidated Statements of Income - USD ($) $ in Millions | 12 Months Ended | ||
|---|---|---|---|
| Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
| Income Statement [Abstract] | |||
| Net sales | $ 24,560 | $ 24,971 | $ 24,939 |
| Credit Card Revenues, Net | 771 | 768 | 702 |
| Cost of sales | (15,171) | (15,215) | (15,181) |
| Selling, general and administrative expenses | (8,998) | (9,039) | (8,954) |
| Gains on sale of real estate | 162 | 389 | 544 |
| Restructuring, impairment, store closing and other costs | (354) | (136) | (186) |
| Operating income (loss) | 970 | 1,738 | 1,864 |
| Benefit plan income, net | 31 | 39 | 57 |
| Settlement charges | (58) | (88) | (105) |
| Interest expense | (205) | (261) | (321) |
| Gains (losses) on early retirement of debt | (30) | (33) | 10 |
| Interest income | 20 | 25 | 11 |
| Income (loss) before income taxes | 728 | 1,420 | 1,516 |
| Federal, state, and local income tax benefit (expense) | (164) | (322) | 39 |
| Net income (loss) | 564 | 1,098 | 1,555 |
| Net loss attributable to noncontrolling interest | 0 | 10 | 11 |
| Net income attributable to Macy's, Inc. shareholders | $ 564 | $ 1,108 | $ 1,566 |
| Basic earnings per share attributable to Macy's, Inc. shareholders | $ 1.82 | $ 3.60 | $ 5.13 |
| Diluted earnings per share attributable to Macy's, Inc. shareholders | $ 1.81 | $ 3.56 | $ 5.10 |
Please calculate the Net Profit Margin for the 3-years (use the information in the FY 2019 Income Statement to calculate the 3-years). Please show your calculations for full score. Remember the net profit margin is expressed as a %.
FY 2019
Net Profit
Net Revenue
Net Profit Margin
FY 2018
Net Profit
Net Revenue
Net Profit Margin
FY 2017
Net Profit
Net Revenue
Net Profit Margin
Please explain to Macys management the information communicated by the Net Profit Margin?
Please explain to Macys management the changes in the net profit margin from FY 2017 to FY 2018, and from FY 2018 to FY 2019. Should the management be concerned with the changing trends between the fiscal years? Please explain.
Page 1 of 3
Please provide two (2) recommendations for improving the FY 2019 net profit margin.
Continuing from 1 above:
Please calculate Macys Total Asset Turnover for FY 2019, 2018, and 2017. Please show your calculations for full score. (Remember, the ratios are expressed in times.
FY 2019
Net Revenue
Avg. Total Assets
Total Asset Turnover
FY 2018
Net Revenue
Avg. Total Assets
Total Asset Turnover
FY 2017
Net Revenue
Avg. Total Assets
Total Asset Turnover
What information is communicated from the Total Asset Turnover ratio? Should Macys management be concerned with the change in ratio between FY 2018 to FY 2019? Please explain and provide one possible and reasonable explanation for the change in the ratio.
Page 2 of 3
Please provide one recommendation, if any, for improving the FY 2019 ratio.
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Advanced Accounting
Authors: Debra C. Jeter, Paul Chaney
2nd Edition
0471218529, 978-0471218524
