Income Statement Analysis

Income Statement Analysis

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?

Post your initial response by Wednesday, midnight of your time zone, and reply to at least 2 of your classmates’ initial posts by Sunday, midnight of your time zone.?