Review the multiple-step income statements that you have completed From the annual report of Target corporation and Amazon .com for the year ended 2017 and evaluate the information. If you had to decide which company was more successful using only the multiple-step income statement you created, which one would you be more likely to invest in and why?
Target Income Statement
2017 (a) | 2016 | 2015 | 2014 | 2013 | |
---|---|---|---|---|---|
FINANCIAL RESULTS: (in millions) | |||||
Sales (b) | $71,879 | $69,495 | $73,785 | $72,618 | $71,279 |
Cost of sales (c) | 51,125 | 49,145 | 52,241 | 51,506 | 50,243 |
Gross margin | 20,754 | 20,350 | 21,544 | 21,112 | 21,036 |
Selling, general and administrative expenses (SG&A) | 14,248 | 13,356 | 14,665 | 14,676 | 14,465 |
Depreciation and amortization (exclusive of depreciation included on cost of sales) (c) | 2,194 | 2,025 | 1,969 | 1,901 | 1,792 |
Gain on sale (d) | — | — | (620) | — | (391) |
Earnings from continuing operations before interest expense and income taxes (EBIT) | 4,312 | 4,969 | 5,530 | 4,535 | 5,170 |
Net interest expense (e) | 666 | 1,004 | 607 | 882 | 1,049 |
Earnings from continuing operations before income taxes | 3,646 | 3,965 | 4,923 | 3,653 | 4,121 |
Provision for income taxes (f) | 718 | 1,296 | 1,602 | 1,204 | 1,427 |
Net earnings from continuing operations | 2,928 | 2,669 | 3,321 | 2,449 | 2,694 |
Discontinued operations, net of tax | 6 | 68 | 42 | (4,085) | (723) |
Net earnings / (loss) | $2,934 | $2,737 | $3,363 | $(1,636) | $1,971 |
PER SHARE: | |||||
BASIC EARNINGS / (LOSS) PER SHARE | |||||
Continuing operations | $5.35 | $4.62 | $5.29 | $3.86 | $4.24 |
Discontinued operations | 0.01 | 0.12 | 0.07 | (6.44) | (1.14) |
Net earnings / (loss) per share | $5.36 | $4.74 | $5.35 | $(2.58) | $3.10 |
DILUTED EARNINGS / (LOSS) PER SHARE | |||||
Continuing operations | $5.32 | $4.58 | $5.25 | $3.83 | $4.20 |
Discontinued operations | 0.01 | 0.12 | 0.07 | (6.38) | (1.13) |
Net earnings / (loss) per share | $5.33 | $4.70 | $5.31 | $(2.56) | $3.07 |
Cash dividends declared | $2.46 | $2.36 | $2.20 | $1.99 | $1.65 |
FINANCIAL POSITION: (in millions) | |||||
Total assets | $38,999 | $37,431 | $40,262 | $41,172 | $44,325 |
Capital expenditures (g) | $2,533 | $1,547 | $1,438 | $1,786 | $1,886 |
Long-term debt, including current portion (g) | $11,587 | $12,749 | $12,760 | $12,725 | $12,494 |
Net debt (g)(h) | $10,456 | $11,639 | $9,752 | $11,205 | $12,491 |
Shareholders' investment | $11,709 | $10,953 | $12,957 | $13,997 | $16,231 |
SEGMENT FINANCIAL RATIOS: (i) | |||||
Comparable sales growth (j) | 1.3% | (0.5)% | 2.1% | 1.3% | (0.4)% |
Gross margin (% of sales) (c) | 28.9% | 29.3% | 29.2% | 29.1% | 29.5% |
SG&A (% of sales) | 19.8% | 19.2% | 19.6% | 20.0% | 20.2% |
EBIT margin (% of sales) | 6.0% | 7.1% | 6.9% | 6.5% | 6.8% |
OTHER: | |||||
Common shares outstanding (in millions) | 541.7 | 556.2 | 602.2 | 640.2 | 632.9 |
Operating cash flow provided by continuing operations (in millions) | $6,849 | $5,329 | $5,254 | $5,157 | $7,572 |
Sales per square foot (g)(k) | $295 | $290 | $307 | $302 | $298 |
Retail square feet (in thousands) (g) | 239,355 | 239,502 | 239,539 | 239,963 | 240,054 |
Square footage growth (g) | (0.1)% | —% | (0.2)% | —% | 0.9% |
Total number of stores (g) | 1,822 | 1,802 | 1,792 | 1,790 | 1,793 |
Total number of distribution centers (g) | 41 | 40 | 40 | 38 | 37 |
Amazon Income Statement
12 months ended | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Net product sales | 160,408 | 141,915 | 118,573 | 94,665 | 79,268 | ||||||
Net services sales | 120,114 | 90,972 | 59,293 | 41,322 | 27,738 | ||||||
Net sales | 280,522 | 232,887 | 177,866 | 135,987 | 107,006 | ||||||
Cost of sales | (165,536) | (139,156) | (111,934) | (88,265) | (71,651) | ||||||
Gross profit | 114,986 | 93,731 | 65,932 | 47,722 | 35,355 | ||||||
Fulfillment | (40,232) | (34,027) | (25,249) | (17,619) | (13,410) | ||||||
Technology and content | (35,931) | (28,837) | (22,620) | (16,085) | (12,540) | ||||||
Marketing | (18,878) | (13,814) | (10,069) | (7,233) | (5,254) | ||||||
General and administrative | (5,203) | (4,336) | (3,674) | (2,432) | (1,747) | ||||||
Other operating expense, net | (201) | (296) | (214) | (167) | (171) | ||||||
Operating income | 14,541 | 12,421 | 4,106 | 4,186 | 2,233 | ||||||
Interest income | 832 | 440 | 202 | 100 | 50 | ||||||
Interest expense | (1,600) | (1,417) | (848) | (484) | (459) | ||||||
Other income (expense), net | 203 | (183) | 346 | 90 | (256) | ||||||
Non-operating income (expense) | (565) | (1,160) | (300) | (294) | (665) | ||||||
Income before income taxes | 13,976 | 11,261 | 3,806 | 3,892 | 1,568 | ||||||
Provision for income taxes | (2,374) | (1,197) | (769) | (1,425) | (950) | ||||||
Equity-method investment activity, net of tax | (14) | 9 | (4) | (96) | (22) | ||||||
Net income | 11,588 | 10,073 | 3,033 |
Target Income Statement | |||||
$ Mio | 2017 | 2016 | 2015 | 2014 | 2013 |
Revenue | 71,879 | 69,495 | 73,785 | 72,618 | 71,279 |
Revenue Growth % | 3% | -6% | 2% | 2% | |
Cost of sales | 51,125 | 49,145 | 52,241 | 51,506 | 50,243 |
Gross margin | 20,754 | 20,350 | 21,544 | 21,112 | 21,036 |
Gross margin% | 28.9% | 29.3% | 29.2% | 29.1% | 29.5% |
Selling , G&A | 14,248 | 13,356 | 14,665 | 14,676 | 14,465 |
Operating Income | 6,506 | 6,994 | 6,879 | 6,436 | 6,571 |
Operating Income% | 9.1% | 10.1% | 9.3% | 8.9% | 9.2% |
EBIT | 4,312 | 4,969 | 5,530 | 4,535 | 5,170 |
EBIT % | 6.0% | 7.2% | 7.5% | 6.2% | 7.3% |
NET Interest Exps | 666 | 1,004 | 607 | 882 | 1,049 |
Net earning from Continue Operation | 2,928 | 2,669 | 3,321 | 2,449 | 2,694 |
Net earning from Continue Operation% | 4% | 4% | 5% | 3% | 4% |
Amazon- Financial Extract | |||||
2019 | 2018 | 2017 | 2016 | 2015 | |
Net Sales ( Product+ Service) | 2,80,522 | 2,32,887 | 1,77,866 | 1,35,987 | 1,07,006 |
Revenue Growth % | 20% | 31% | 31% | 27% | |
Cost of sales | 1,65,536 | 1,39,156 | 1,11,934 | 88,265 | 71,651 |
Gross margin | 1,14,986 | 93,731 | 65,932 | 47,722 | 35,355 |
Gross margin% | 41.0% | 40.2% | 37.1% | 35.1% | 33.0% |
Fulfillment | 40,302 | 34,027 | 25,249 | 17,619 | 13,410 |
Technology | 35,931 | 28,837 | 22,620 | 16,085 | 12,540 |
Marketing | 18,878 | 13,814 | 10,069 | 7,233 | 5,254 |
G&A | 5,203 | 4,336 | 3,674 | 2,432 | 1,747 |
Operating Income | 14,541 | 12,421 | 4,106 | 4,186 | 2,233 |
Operating Income % | 5.2% | 5.3% | 2.3% | 3.1% | 2.1% |
Income Before Tax | 13,976 | 11,261 | 3,806 | 3,892 | 1,568 |
Income Before Tax% | 5.0% | 4.8% | 2.1% | 2.9% | 1.5% |
Net Income | 11,588 | 10,073 | 3,033 | ||
Net earning from Continue Operation% | 4% | 4% | 2% | 0% | 0% |
Target Company – Income Statement – 5 Year Analysis Report
In the Question , Amazon company balance sheet details not provided like Target Company .
On the basis of Income statement analysis , Noticed that Amazon is quite large and volume base company as compared iwth Target Company . YOY Target company established revenue growth ONLY single digit growth ( approx 3%) . Where as Amazon established revenue growth double digit growth.
In case of Amazon , company established 20% + growth where as target company establish less than 5% .. so In this point , definitely I will suggest to Invest money in Amazon
From Gross Profit , Amazon established excellent Growth and established 40%+ Where as Target company making +ve Operating Margin but must lower than Amazon .
Amazon established steady Operating margin on YOY basis with high volume as compared with target . It will be always good to Invest in Amazon .
From Operating Margin as well as Net profit Margin point of view Both companies established +ve Margin but at lower side .
I thought multiple-step income statements had to be in this format?
Review the multiple-step income statements that you have completed From the annual report of Target corporation...
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