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
Revenue (aka Sales, Turnover)
Cost of Goods Sold/Cost of Sales
Salary Expense
Selling, General and Administrative Expense
Gross Profit
Operating Profit
Net Profit
Ratio
- 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 an 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:
- a. What is the trend for this line item or ratio?
- b. Has the line item or ratio amount increased or decreased?
- c. Is this a “good” thing or a “bad” thing? For this company?
- d. What might management do to improve this line item or ratio?
