13 Aug This week’s 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.

This week’s 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.

Locate and post a screen shot of an actual Income Statement from the latest fiscal year for one of the following companies:
Sears (Note: use this link Sears Holding Corp 10-K )
Tesla
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
What does this line item or ratio measure and why is it important item for Management to understand this number?
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.
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?

peer#1
RE: Week 3 Discussion Attachment
COLLAPSE
Week 3 DiscussionIncome Statement AnalysisThis week’s 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.
Locate and post a screen shot of an actual Income Statement from the latest fiscal year for one of the following companies:
Sears (Note: use this link Sears Holding Corp 10-K)
Sears Holdings Corporation Pick an Income Statement Line Item or Ratio from the list below:Merchandise Sales
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

What does this line item or ratio measure and why is it important item for Management to understand this number?
The Merchandise Sales line item represents the company’s ability to move goods to consumers (3).
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.
Historical Merchandise Sales (amounts in millions)
2017 2016 2015
$13,409 $18,236 $20,936
Answer the following questions:
What is the trend for this line item or ratio?
The trend for Merchandise Sales was downward from 2015 through 2017.
Has the line item or ratio amount increased or decreased?
The item decreased each year represented.
Is this a “good” thing or a “bad” thing? For this company?
For this company this number is a bad thing because consumers were decreasing the amount of items purchased by Sears.
What might management do to improve this line item or ratio?
In the case for Sears they began by closing many of their stores then they filed bankrupt in October 2018 (2). The company was purchased by Eddie Lampert in February 2019 (2).Regards,TiffanySource:1. Transformco. February 2018. “United States Securities and Exchange Commission; Sears Holding Corporation.” https://transformco.com/docs/investor/SHC_2017_Form_10-K.pdf2. Ciment, Shoshy. (November 2019). “Sears is closing 96 more stores, leaving only 182 stores closing in the US. Here’s the full list of the one’s closing.” http://static3.businessinsider.com/sears-to-close-96-more-stores-kmart-list-sears-transformco-2019-113. Ittelson, Thomas. (2020). “Financial Statements; Income Statement.” Career Press Newburyport, MA
peer#2
paul weaver
RE: Week 3 Discussion AttachmentCOLLAPSE
Hello Professor Miller and Classmates,I have selected Sears Holding Corp 10-K (2) as my company income statement to evaluate. I have also selected the line item Revenue to review and discuss.SEARS HOLDING CORPORATION:
What does this line item or ratio measure and why is it important item for Management to understand this number?Revenue or sales are top-line items for the company (4). Revenue represents the financial gain that the company has benefited by through the sale of goods or services (1). Revenue is an important indicator of performance and can be found on the company’s income statement (5). Revenue is also useful for common-sizing line items on income statements for comparison purposes (6).Identify the past 4 years of amounts for your line item or ratio. Share this data with the class using a data table or chart.What is the trend for this line item or ratio?Starting with the year 2014 there was a negative trend for four years with 2017 having the largest percent change from the prior year.Has the line item or ratio amount increased or decreased?The trend was negative.Is this a “good” thing or a “bad” thing? For this company?This is a very bad trend that needed immediate intervention.What might management do to improve this line item or ratio?We know that Sears filed for bankruptcy and closed its stores. The company needed to carefully examine all its business and determine where the losses were coming from. A turn-around plan needed to be established. The non-performing businesses or areas of the company needed to be eliminated immediately.References:
JWI520. 2020. Week 3, Lecture Notes:and EOP Videos
Sears Holding Corp 10-K, Income Statement: https://transformco.com/docs/investor/SHC_2017_Form_10-K.pdf
Siciliano, B.(2015). Finance for Nonfinancial Managers. CWL Publishing Enterprises.
Ittelson, T. (2017). Financial Statements. Macmillan Publishers India Private Limited.
Kay and Jim Stice (2018). Finance and Accounting Tips – Income Statement, LinkedIn Learning. https://www.linkedin.com/learning/finance-and-accounting-tips/income-statement?u=57878161
Kay and Jim Stice.(2018) Finance and Accounting Tips – Common Size Income Statements, LinkedIn Learning. https://www.linkedin.com/learning/finance-and-accounting-tips/how-to-common-size-the-income-statement?u=57878161