Question

CP3-2 (Static) Finding Financial Information LO3-2, 3-4, 3-6

Refer to the financial statements of Express, Inc. Attached Bellow

2. Assuming that $50,000 of cost of goods sold was due to non-inventory purchase expenses (distribution and occupancy costs), how much inventory did the company buy during the year? (Hint: Use a T-account of inventory to infer how much was purchased.)

3. Calculate selling, general, and administrative expenses as a percentage of sales for each year presented.

4. By what percent did selling, general, and administrative expenses increase or decrease from fiscal years 2017 and 2016 and between fiscal years 2015 and 2016? (Hint: Percentage Change = [Current Year Amount − Prior Year Amount] ÷ Prior Year Amount.)

5. Compute the company's net profit margin for each year.

EXPRESS, INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Amounts in Thousands, Except Per Share Amounts) 2017 2016 2015 NET SALES $ 2,138,030 $ 2,192,547 $ 2,350,129 COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS 1,522,797 1,529,343 1,554,852 Gross profit 615,233 663,204 795,277 OPERATING EXPENSES: Selling, general, and administrative expenses 562,088 559,541 587,747 Restructuring costs 22,869 Other operating expense, net 536 292 Total operating expenses 585,493 559,603 588,039 OPERATING INCOME 29,740 103,601 207.238 INTEREST EXPENSE, NET 2.242 13,468 15.882 OTHER (INCOME) EXPENSE, NET (537) (484) 672 INCOME BEFORE INCOME TAXES 28,035 90,617 190,684 INCOME TAX EXPENSE 33,200 74.171 NET INCOME 19,366 $ 57,417 $ 116,513 OTHER COMPREHENSIVE INCOME: Foreign currency translation gain (loss) (402)$ 862 $ (1,608) Amount reclassified to earnings 4,205 COMPREHENSIVE INCOME $ 23,169 $ 58,279 $ 114,905 EARNINGS PER SHARE: Basic s $ 0.25 s 0.25% 0.73 0.73 $ $ 1.39 1.38 Diluted WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 78,592 78,669 83.90 Diluted 78,870 79,049 84,591 See notes to consolidated financial statements.

Answer 1

Answer to Question 2:

Answer to Question 2: Inventory 28-Jan- 2017 Opening Balance $ Cost of goods sold Closing Balance $ 241,424 3-Feb- 1,497,644 2018 1,472,797 Purchases $ $ 266,271 Hence, if the non-inventory purchase expenses have been added in the cost of goods sold, in order to find out how much inventory was purchased. We will use the actual cost of goods sold which is $1,522,797 - $50,000 = $1,472,797 Purchases = Closing Balance + Cost of goods sold - Opening Balance Purchases = $266,271 + $1,472,797 - $241,424 Purchases = $1,497,644

Answer to Question 3,4, and 5:

Answer to Question 3: 2017 2,138,030 2016 2,192,547$ 2015 2,350,129 $ $ Sales Selling and Administrative Expenses Percentage of Sales Calculation 562,088 $ 559,541 $ 587,747 26.29% 25.52% ($562,088/$2,138,030) X 100 ($559,541/$2,192,547) X 100 25.01% $587,747/$2,350,129) X 100 Answer to Question 4: Percentage Change = [Current Year Amount - Prior Year Amount]/ Prior Year Amount.) Percentage Change from 2016 to 2017 = ($562,088 - $559,541)/559,541 Percentage Change from 2016 to 2017 = $2,547/$559,541 Increase from 2016 to 2017 = 0.46% Percentage Change from 2015 to 2016 = ($559,541 - $587,747)/587,747 Percentage Change from 2015 to 2016 = -$28,206/$587,747 Decrease from 2015 to 2016 = 4.80% Answer to Question 5: Net Profit Margin = (Net Income/Sales) X 100 2017 Sales $ 2,138,030 Net Income 19,366 Net Profit Margin 0.91% Calculation ($19,366/$2,138,030) X 100 2016 2015 $ 2,192,547$ 2,350,129 $ 57,417 $ 74,171 2.62% 3.16% ($57,417/$2,192,547) X 100 ($74,171/$2,350,129) X 100