Question

REQUIRED FORMAT:

Ratios chart Analysis chart

Your submission should be ONE page containing the ratios chart and the analysis chart with your final answers. These must be single-spaced. There is nothing else on this page. Do not put your name, my name, the date, the name of the course, the course number, the assignment number, or anything else.

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Use the financials below to calculate the profitability ratios and cashflows for Year -1 for Tiffany. Enter your answers in the ratios chart under Year -1. Then analyze the ratios for Years -1 to -3. Enter your answers in the analysis chart.

Consolidated Statements of Earnings - USD$ in Mill		Consolidated Statement of Cash Flows - USD$ in Mill
Net sales	$4,442.1	Net earnings	$586.4
Cost of sales	1,631.1	Depreciation & amortization	220.6
Gross profit	2,811	Provision for inventories	54.4
Selling, general & admin. expenses	2,020.7	Deferred income taxes	(21.3)
Earnings from operations	790.3	Accounts receivable	(30.8)
Interest expense	39.7	Inventories	(270.5)
Other expense, net	7.1	Other assets, net	38.6
Net earnings	$586.4	Accounts payable	53.7
		Income taxes payable	(104.6)
		Merchandise credits	(1.0)
		Other long-term liabilities	6.3
		Net cash provided by operating activities	531.8
		Cash Flows rom Investing Activities:
		Proceeds on sales of marketable sec., net	240.0
		Capital expenditures	(282.1)
		Other, net	12.2
		Net cash used in investing activities	(29.9)
		Cash Flows from Financing Activities:
		Repayment of credit facility borrowings	(1.1)
		Repurchase of Common Stock	(421.4)
		Proceeds from exercised stock options	23.1
		Payments related to tax withholding	(8.6)
		Cash dividends on Common Stock	(263.8)
		Distribution to non-controlling interest	(0.3)
		Financing fees	(2.2)
		Net cash used in financing activities	(674.3)
		Effect of forex on cash & equivalents	(5.7)
		Net (decrease) increase in cash & equivalents	(178.1)
		Cash & equivalents at beginning of year	970.7
		Cash & equivalents at end of year	$792.6

	Year -1	Year -2	Year -3
Net Profit Margin (NPM)		0.09	0.11
Operating Cash Flows (OCF)		932	706
Financing Cash Flows (FCF)		(421)	(386)
Operating + Investing Cash Flows (OCF+ICF)		451	469

Ratio	Trend/jump/drop of concern (inc. years)	Problem indicated by trend/jump/drop
NPM
OCF
FCF
OCF+ICF

Answer 1

	Year -1	Year -2	Year -3
Net Profit Margin (NPM)	0.13	0.09	0.11
Operating Cash Flows (OCF)	531.80	932.00	706.00
Financing Cash Flows (FCF)	(674.30)	(421.00)	(386.00)
Operating + Investing Cash Flows (OCF+ICF)	501.90	451.00	469.00

Ratio	Trend/jump/drop of concern (inc. years)	Problem indicated by trend/jump/drop
NPM	Concern years 2 &3	NPM dropped in year 2 and bounced back in year 3, it shows that something went wrong in year 2
OCF	Concern years 2 &3	OCF increased in year 2 and dropped in year 3, looks like the company has to focus on collecting from customers or sell the inventory faster
FCF	Trend years 2&3	Financing cash flow decrease would indicate a lesser payment of dividends, this is not a good sign as unhappy shareholders would demand dividends
OCF+ICF	Concern years 2 &3	Trend is very choppy need to drill into details