Question

Comparing Operating Characteristics Across Industries Following are selected income statement and balance sheet data for companies in different industries. $ millions Sales Net Income Assets Liabilities Cost of Goods Sold $53,299 20,441 Stockholders' Equity $11,297 9,812 $75,356 36,397 $2,937 1,933 $41,290 22,536 $29,993 12,724 Target Corp. Nike, Inc. Harley- Davidson 531 5,717 53,647 3,352 11,248 10,666 159,422 8,892 95,664 1,774 63,758 Pfizer 11,188 (a) Compute the following ratios for each company. • Round all answers to one decimal place (percentage answer example: 0.2345 = 23.5%). • Note: The liabilities to stockholders' equity ratio should not be converted into a percentage answer (round answers to one decimal place, for example: 0.452 = 0.5). Gross Profit / Sales Net Income/ Sales Net Income/ Stockholders' Equity Liabilities/ Stockholders' Equity % % % Company Target Corp. Nike, Inc. Harley-Davidson Pfizer % % % % % % % % %

Answer 1

a) Following is the ratio computation:

Company GP/Sales Net Income/Sales Net Income/stockholders'Eq uity Liabilities/ Stockholders' Equity Target Corp Nike Inc. Harley Davidson Pfizer 29.3% 43.8% 41.4% 79.0% 3.9% 5.3% 9.3% 20.9% 26.0% 19.7% 29.9% 17.5% 2.7 1.3 5.0 1.5)

(Gross profit= sales-Cost of Goods Sold)

b) The higher gross profit companies are typically those that have some competitive advantage that allows them to charge a market price for their products which can not be easily competed away.

c) Harley Davidson

Statement 3 is most appropriate .

d) Harley Davidson

Statement 3 is most appropriate .