Template for Course Project Assignment-INDIVIDUAL due

4/28/16
Learning about your Company and its Financial Statements

Warning: finish this individual assignment early so you can start on the
group project!
Your
name

Christelle
Matsuda

Other
team
member(s
)

Angela Yanaguibashi,
Chenru Ye, Evie Blackburn

Sectio
n#

To begin, (1) download your Companys most recent SEC Form 10-K in pdf format
from its investor relations site,1 and (2) use it to answer the questions below in the
space provided. [Hints: 1. Enter the numerical data (e.g., current assets) in the
optional but recommended Project Spreadsheet Exhibit A (available on
Blackboard); build formulae to calculate ratios (e.g., current ratio); and transfer the
required information to this template. 2. Some items requested may not be where
you expect to find them in the 10-K. If you cannot find an item, type in what you
are looking for (e.g., preferred stock) into the upper right hand search window in
the 10-K pdf file.]

Part 1: Basic data on your company

Company name

Macys Inc.

Company stock ticker symbol

Company headquarters location

Cincinnati, OH

Industry name

General Merchandise

CEO (who signed the letter to shareholders)

Terry J. Lundgren

Companys key Products or Services include:

Feminine accessories, intimate

apparel, shoes and cosmetics,
feminine apparel

Customers tend to be: (this of course will be

a generalization; examples include:
business, consumers, women, young
professionals, teens, etc.)

American middle class between

the ages of 16 and 34

Companys closest competitors are:

Amazon, Bed Bath & Beyond, Gap,

J.C.Penney

Robert Bowen and Jane Jollineau of the University of San Diego prepared this template.
Revised: 1/18/16.
1 To find SEC Form 10-K, go to your companys investor relations site, e.g.,
http://investor.apple.com and look for SEC Filings. You can generally narrow this search
by selecting annual under forms. If you get a choice of file formats to download,
choose pdf format for readability and because the file can be searched.

Accounting 201 Financial Accounting Course Project AssignmentINDIVIDUAL for [insert

company name]
p. 2

Part 2: Understanding the financial statements

Who is the Companys external audit firm?
(e.g., PwC)
Does the Company follow a calendar year
(ending approximately December 31)? (Yes
or No)
If they do not use a calendar year, why do
you believe that is?

KPMG LLC
No
They use a fiscal year ending in
January

Part 2A: The Balance Sheet

Find your Companys Balance Sheet and answer the questions below:
Most
recent year
available

1st Prior
Year

1/30/16

1/31/15

millions

na

What is the dollar amount of total assets?

20,576

21,330

What is the dollar amount of total liabilities?

16323

15952

4253

5378

Yes

Yes

Property &
Equipment,
Noncurrent
Long Term
Debt,
Noncurrent

Property &
Equipment,
Noncurrent
Long Term
Debt,
Noncurrent

(1041)

(20)

6,334

7,340

1.34

1.69

What is the balance sheet date? (e.g., 9/30/15 and

9/30/14)
Balance sheet numbers are expressed in
$____________ , e.g. thousands, millions.

What is the dollar amount of total shareholders

equity?
Does A = L + OE? (Yes or No)
Name the Companys largest asset. Is it current
or noncurrent?
Name the Companys largest liability? Is it
current or noncurrent?
What is the dollar amount of contributed capital?
[pref. stock + common stock + addtl paid-in
capital treasury stock]
What is the dollar amount of earned capital?
[retained earnings +/- other comprehensive
income]
Calculate the current ratio [= current assets
current liabilities]? see your spreadsheet
Based on the current ratio, did the Company
become more or less liquid comparing its current
year to the prior year?
Calculate the total debt to total assets ratio [=
total liabilities total assets] see textbook p. 60
see your spreadsheet

Less liquid
.79

.75

Accounting 201 Financial Accounting Course Project AssignmentINDIVIDUAL for [insert

company name]
p. 3

Based on the total debt to total assets ratio

computed above, is the Company better off or
worse off in its ability to withstand long-term
financial difficulties?

The ratio is higher,

suggesting that the
company is worse off in
withstanding long term
financial difficulties

What is your overall assessment of your Companys financial condition?

Refer to any of the above numbers or ratios in your brief summary. Insert
your answer in the box below:
The current ratio has decreased below 1.5, which means that they may be having
financial trouble. It means liabilities are increasing and assets are decreasing as
shown by the increase in the debt to assets ratio.

Accounting 201 Financial Accounting Course Project AssignmentINDIVIDUAL for [insert

company name]
p. 4

Part 2B: The Income Statement

Find your Companys Income Statement and answer the questions below:
How many years of comparative information are provided? (usually =
3)

3
2nd Prior
Year

Most
recent
year

1 Prior
Year

27029

28105

27931

-3.8%

.6%

na

10583

11242

11206

39.1%

40.0%

40.1%

2039

2800

2678

-27.2%

4.56%

na

What is the dollar amount of Net Income?

1070

1526

1335

Compute the % change in Net Income (NI)

[= (current year NI prior year NI)/prior
year NI]

-29.8%

2.69%

na

Compute Operating Profit Margin [=

operating income net sales]

.075

.054

.053

Compute Profit Margin [= net income net

sales] see textbook p. 250

.040

.054

.053

What is reported as basic earnings per

share (EPS)? (look it up no need to
calculate)

3.26

4.30

3.93

Insert numbers and compute financial

ratios
What is the dollar amount of total Sales
Revenue (a.k.a., net sales or net revenue)?
Compute the % change in Revenue (Rev) [=
(current year Rev prior year Rev)/prior
year Rev]
What is the dollar amount of Gross Profit?
[If it is not given, Gross Profit = sales
revenue minus cost of goods sold, a.k.a.,
cost of sales2]
Compute Gross Profit rate [= gross profit
net sales revenue] see textbook p. 248
What is the dollar amount of Operating
Income? [Often shown as a subtotal in the
I/S; if not given, Operating Income is net
sales minus expenses related to day-to-day
operations.]
Compute the % change in Operating
Income (Op Inc) [= (most recent years Op
Inc prior year Op Inc)/prior year Op Inc]

st

2 You can estimate Cost of Sales for service companies by adding selected operating
expenses, but make sure everyone in your group uses the same definition and that each of
you disclose it.

Accounting 201 Financial Accounting Course Project AssignmentINDIVIDUAL for [insert

company name]
p. 5

What is your overall assessment of your Companys performance? Refer to

any of the above numbers or ratios in your brief summary.
Sales revenue, profit, net income have all decreased significantly from the
previous year. They are not doing well.

Part 2C: The Statement of Cash Flows

Find your Companys Statement of Cash Flows (SCF) and answer the
questions below:
How many years of comparative information are provided in the
SCF?

Insert the amounts requested below. Check the math by summing to the
cash balance at the end of the year. Verify that the ending cash balance
reported in the SCF is the same amount reported on the balance sheet for
the most recent year available.
Most recent
year available

1st Prior Year

Cash provided by operations

1984

2709

Cash from investing activities

(1092)

(970)

Cash from financing activities

(2029)

(1766)

Change in cash (may be called increase or

decrease in cash & equivalents)

(1137)

(27)

Yes

Yes

415

1226

Disposition of
property &
equipment
Purchase of
property &
equipment
Debt Issued

Disposition of
property &
equipment
Purchase of
property &
equipment
Debt Issued

Insert numbers and compute ratios:

Do the balances in Cash & equivalents at the

beginning and end of the fiscal year in the
Statement of Cash Flows match the amounts
shown in the Balance Sheet? (Yes or No)
Compute Free Cash Flow [net cash provided
by operations capital expenditures cash
dividends] see textbook p. 61
Name the largest cash inflow in the investing
activities section of the SCF.
Name the largest cash outflow in the investing
activities section of the SCF?
Name the largest cash inflow in the financing
activities section of the SCF?

Accounting 201 Financial Accounting Course Project AssignmentINDIVIDUAL for [insert

company name]
p. 6

Name the largest cash outflow in the

financing activities section of the SCF?

Acquisition of
Treasury Stock

Acquisition of
Treasury Stock

Accounting 201 Financial Accounting Course Project AssignmentINDIVIDUAL for [insert

company name]
p. 7

Part 3: A deeper look at the financial statements

Part 3A: Inventories
Using your Companys financial statements, answer the questions below:

Insert numbers and compute financial ratios

Most
recent year
available

1st Prior
Year

Does the Company report Inventories?3 (Yes or No)

Yes

Yes

Retail

Retail

6226

6155

Merchandise
LIFO, Retail
FIFO

Merchandise
LIFO, Retail
FIFO

--

--

2.66

na

137.2

na

Do they appear to be manufacturing, retail or some

other inventory accounts?
What is the dollar amount of total inventories at
yearend?
What is the major inventory method (cost-flow
assumption), e.g., FIFO, LIFO, weighted-average?
If they use LIFO, what would have been the ending
balance under FIFO?
Compute inventory turnover for the most recent
year. [Inventory turnover = CGS Average
Inventory] -- see textbook p. 300
Compute days in inventory for the most recent
year.
[Days in inventory = 365 inventory turnover
ratio] -- see textbook p. 300

Part 3B: Accounts Receivable

Using your Companys financial statements, answer the questions below:

Does the Company report Accounts Receivable?

(Yes or No)
What is the dollar amount of Accounts Receivable
net of Allowance for Doubtful Accounts at yearend?
[Insert not disclosed if Accounts receivable is not
disclosed anywhere.]
What is the balance in Allowance for Doubtful
Accounts at yearend? (this account may have a
different name4)

Most
recent year
available

1st Prior
Year

Yes

Yes

558

424

88

93

3 Some service companies may disclose inventories even though they are not reported on
the balance sheet.
4 Allowance for doubtful accounts is not always provided. Try looking in the notes,
especially supplemental information often found at the end of the notes to the financial
statements. If you cannot find it, insert not disclosed.

Accounting 201 Financial Accounting Course Project AssignmentINDIVIDUAL for [insert

company name]
p. 8

What is the balance in accounts receivable, gross,

at yearend? [= Accounts Receivable, net plus
Allowance for Doubtful Accounts]
Compute the % of gross Accounts Receivable that
management expects to be uncollectible at
yearend
[= Allowance for DA Accounts Receivable, gross]
Compute Accounts Receivable Turnover for the
most recent year. [= Net Sales Ave net A/R]
see your spreadsheet
Compute Accounts Receivable Collection Period in
days for the most recent year. [= 365 Accounts
Receivable Turnover ratio] see your spreadsheet

646

517

15.77%

17.99%

67.70

na

5.39

na

Considering Accounts receivable and Inventories above, what do you infer

about the Companys operating assets? Refer to any of the above numbers
or ratios in your brief summary.
Macys has a high accounts receivable turnover of 67.70 which is a good because
it means they are collecting their receivables every 5.39 days.

Part 3C: Long-lived assets

Does the Company report fixed assets (e.g.,

property, plant & equipment) on its balance sheet?
(Yes or No)
What is the balance in Property, Plant &
Equipment, net, at yearend?
What depreciation method is used (e.g., straightline)?
What is the balance in Accumulated Depreciation
at yearend? (see the notes to the financial
statements)
What is the original cost of the Property, Plant and
Equipment at yearend?
Compute yearend Accumulated Depreciation the
yearend original cost of PP&E
Does the Company report any intangible assets
(e.g., Goodwill) on its balance sheet? (Yes or No)
Compute the ratio of intangible assets to total
assets.
[= yearend intangible assets yearend total
assets]

Most
recent year
available

1st Prior
Year

Yes

Yes

7708

7865

Straight-line

Straight-line

5457

5830

7865

8063

.69

.67

Yes

Yes

.214

.198

Accounting 201 Financial Accounting Course Project AssignmentINDIVIDUAL for [insert

company name]
p. 9

Compute Asset Turnover [= net sales average

total assets] see textbook p. 465 see your
spreadsheet

1.29

na

What do you infer about the Companys long-lived assets? Refer to any of
the above numbers or ratios in your brief summary.
Long lived assets are depreciating steadily and being replaced steadily.

Accounting 201 Financial Accounting Course Project AssignmentINDIVIDUAL for [insert

company name]
p. 10

Part 3D: Liabilities

Using your Companys financial statements, answer the questions below:

Insert numbers and compute financial ratios

What is the Companys largest current liability at
yearend?
Does the Company report unearned (or deferred)
revenue? (Yes or No)
What is the total dollar amount of noncurrent
liabilities at yearend?
Compute times interest earned [= net operating
income interest expense] see textbook p. 525
Compute cash debt coverage [= net cash provided
by operating activities avg. total liabilities] see
text p. 646

Most
recent year
available
Accounts
Payable and
Accrued
Liabilities

1st Prior
Year
Accounts
Payable and
Accrued
Liabilities

No

No

10595

10877

5.62

7.09

.12

na

Considering the information above and the debt-to-total-assets ratio

calculated in section 2A, what do you infer about the Companys ability to
repay its debts? Refer to any of the above numbers or ratios in your brief
summary.
1.5 2 is a good ratio, but the company has dropped to 1.39 which suggests that
they may have difficulty paying it back.

Part 3E: Stockholders Equity

Most
recent year
available

1st Prior
Year

Yes

Yes

1,000 mil

1,000 mil

How many common shares are issued at yearend?

341.6 mil

379.6

What is the average cost of shares issued at

yearend? [= (C/S at par + addtl paid-in-capital) 5
yearend shares issued]

18.64

30.48

Insert numbers and compute financial ratios

Does the Company report any preferred stock? (Yes
or No)
How many common shares are authorized at
yearend?

5 Assumes the company issued stock that had a par value. If not, just use the total
common stock.

Accounting 201 Financial Accounting Course Project AssignmentINDIVIDUAL for [insert

company name]
p. 11

Did the Company repurchase common shares? 6

(Yes or No)
Does the Company report any treasury stock? If
so, how many shares are held as treasury stock?
How many common shares are outstanding at
yearend?
What is the average cost per share of treasury
shares at yearend (if treasury stock is reported)?
How much did the Company pay in dividends
during the year (if any)? (Hint: see the statement
of cash flows.)
Compute the Dividend Payout ratio [= cash
dividends declared on C/S net income] see
textbook p. 594 see your spreadsheet
Compute Return on Assets [= net income
average total assets] see textbook p. 464 see
your spreadsheet
Compute Return on Common Equity [= (net
income preferred stock dividends, if any)
average total (common) shareholders equity]
see textbook p. 595 see your spreadsheet
Is earned capital increasing or decreasing? Why?

Yes

Yes

2,000

1,900

310.6 mil

340.6 mil

43.55

62.64

456

421

.42

.28

5.1%

n/a

22.2%

n/a

Decreasing

Increasing

Considering the information above, what do you infer about the Companys
financial structure? Refer to any of the above numbers or ratios in your
brief summary.
Their return on assets is a good percentage. However, their overall performance
this year has significantly declined from the previous year(s) as seen from the
29.8% decrease in net income.

6 Check the Statements of Shareholders Equity and look for share repurchases or treasury stock

Accounting 201 Financial Accounting Course Project AssignmentINDIVIDUAL for [insert

company name]
p. 12

Part 3F: More Financial Statement Analysis -- Common-Size Income

Statements
The goal of common-size statements is to compare a company across time
and to other companies. Prepare a common-size income statement for your
company and insert it below. Common-size income statements express
each line item as a percentage of revenue. Thus, revenue will be shown as
100%. Below is the example for iRobot. The common-size statement is on
the right. (As an option, you can complete 2012 for practice.)
Below is iRobot as an example. (Please replace this iRobot example with
your company three years is sufficient. Note that your companys income
statement is likely to have different line items than those shown for iRobot.
Use what is reported for your company.)
[replace the example below with your company]

What do you observe from the common-size analysis of your company (NOT
iRobot)?
Net income is a really small portion of net sales and they have large operating
expenses.

Accounting 201 Financial Accounting Course Project AssignmentINDIVIDUAL for [insert

company name]
p. 13

Part 4: Discussion of a news article about the Company

Description of Article discussion

Macy's To Close Stores, Cut Jobs Amid Disappointing Sales, Lauren

Gensler, Forbes, 1/6/16)
http://www.forbes.com/sites/laurengensler/2016/01/06/macys-cost-cuttingjobs/#3dedd69515e4
This article is about how Macys has just announced that had to cut back
this year due to poor sales. They have had to close down about 30 stores
across the country. They attribute poor sales to the warm winter, which
greatly decreased holiday sales of warm weather clothing and accessories,
which makes up most of the sales. Macys has a large percentage of their
stores located in the northeast, where they normally are able to sell their
winter clothing. They also attribute it to the strong dollar, which has caused
a decrease in sales to tourists. It is also partly due to the competition such
Amazon, which is making its way into a larger portion of the market. Macys
is cutting costs by cutting office positions and reallocating employees. The
cuts in cost are expected to save 400 billion dollars. After following an
increasing trend for years, the stock price of Macys took a downward path
beginning in the middle of 2015. However, it was not just Macys that had a
bad year. Other retail companies also faced a decrease in sales due to the
warm weather. Shares in Macys were down 43% and earnings per share
range from 2.18 to 2.23.

Accounting 201 Financial Accounting Course Project AssignmentINDIVIDUAL for [insert

company name]
p. 14

Part 5: Evaluating your Companys stock price performance

Track your companys stock price performance across the two fiscal years you are
using to analyze its financial performance in Parts 2 & 3 above. Go to
finance.yahoo.com, find your company, look up historical prices in the left-hand
menu, enter dates and prices, and calculate stock price performance for each year.
Finally, refer to the corresponding financial (net income) performance in Part 2B
above and make comparisons at the bottom of the page.

Insert dates, closing stock prices and

Compute stock price performance
Insert balance sheet dates (e.g., 9/30/15,
9/30/14 and 9/30/13)
Insert dates for closing stock prices closest
to balance sheet dates above
Insert closing stock prices for each date
Calculate percentage change in stock price
for each year [= (yearend price beg
price)/beg price]
Percentage change in Net Income (NI) -- see
part 2B [= (current year NI prior year
NI)/prior year NI]

Most
recent
yearend
available

Yearend
1st Prior
Year

Beginnin
g
1st Prior
Year

1/30/16

1/31/15

2/1/14

1/30/16

1/31/15

2/1/14

40.91

64.18

50.91

-37.1%

18.5%

na

-29.9%

14.3%

na

Assess your Companys stock price performance relative to its financial (net
income) performance? Refer to any of the above numbers in your brief
summary.
Stock prices reflect the overall trend of decreased performance that is also shown
in the balance sheet. Prices have dropped.

Accounting 201 Financial Accounting Course Project AssignmentINDIVIDUAL for [insert

company name]
p. 15

Appendix: Insert your companys financial statements here these

should fit on 4-5 pages
Include high-quality copies or screenshots of the following financial statements
from the Companys 10-K not abbreviated versions from Finance Yahoo or Google
Finance.

Balance sheet (may be on two pages)

Income statement
Statement of Cash Flows
Statement of Changes in Stockholders Equity