What are the company’s largest assets? Largest liabilities?
Neiman’s largest assets include cash and cash equivalents, credit card receivables, and merchandise inventories. Other assets include property and equipment, tradenames, goodwill, and other long-term assets. Its largest liabilities include long-term debts, accounts payable, and accrued liabilities. The company had total assets of $7,545,903,000 and $7,703,516 in 2018 and 2017, respectively. Macy’s, Inc. largest assets are cash and cash equivalents, receivables, merchandise inventory and prepaid expenses. Other assets include property and equipment, goodwill, and other intangible assets. The company had total assets of $19,381,000,000 and $19,851,000,000 in 2018 and 2017, respectively.
What proportions of the total assets is financed by owners? (Hint: Compare with total equity.)
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Neiman Marcus Group LTD LLC
Macy’s, Inc.
What proportion of total assets is financed by nonowners?
Neiman Marcus Group LTD LLC
Macy’s, Inc.
What is profit margin?
Neiman Marcus Group LTD LLC
Macy’s, Inc.
What is ROA?
Neiman Marcus Group LTD LLC
Macy’s, Inc.
What is ROE?
Neiman Marcus Group LTD LLC
Macy’s, Inc.
What is Asset Turnover?
Neiman Marcus Group LTD LLC
Macy’s, Inc.
Compute RNOA.
Neiman Marcus Group LTD LLC
Macy’s, Inc.
Compare ROE and RNOA between the companies.
Neiman Marcus Group LTD LLC has a higher ROE than Macy’s, Inc. Neiman’s ROE is 33.08% while Macy’s ROE is 27.13%. With regard to RNOA, Macy’s Inc. has a higher RNOA than Neiman Marcus Group LTD LLC. The RNOA of Marcy’s Inc. is 23.03% while the RNOA of Neiman Marcus Group LTD LLC is 1.2%.
Which company is more profitable?
Marcy’s Inc. is more profitable than Neiman Marcus Group LTD LLC. This is because it has a higher RNOA, profitable margin, ROA, and Asset Turnover than Neiman Marcus Group LTD LLC.
What is the contribution margin? Contribution margin ratio? Prepare a contribution margin statement. If there is not information regarding variable and fixed costs, then assume the variable cost is 70% of total costs and expenses.
Neiman Marcus Group LTD LLC
Macy’s Inc.
What is the breakeven sales dollar amount?
Neiman Marcus Group LTD LLC
Macy’s Inc.
Each company decides to accept a special order for 50% less the contribution margin (with adequate capacity). What is the net advantage (disadvantage) of accepting the special order?
Neman Marcus Group LTD LLC |
||
| Actual | Special Order | |
| Sales Revenue |
$4,900,400,000 |
$7,350,600,000.0 |
| Variables costs |
$3,150,280,000 |
$4,725,420,000.0 |
| Contribution Margin |
$1,750,120,000 |
$2,625,180,000 |
| Fixed Costs |
$1,179,600,000 |
$1,769,400,000.0 |
| Profit |
$570,520,000 |
$855,780,000 |
Neman Marcus Group LTD LLC |
||
| Actual | Special Order | |
| Sales Revenue |
$24,837,000,000 |
$37,255,500,000.0 |
| Variables costs |
$10,606,400,000 |
$15,909,600,000.0 |
| Contribution Margin |
$14,230,600,000 |
$21,345,900,000 |
| Fixed Costs |
$4,545,600,000 |
$4,545,600,000 |
| Profit |
$9,685,000,000 |
$16,800,300,000 |
Prepare a budgeted income statement for the next fiscal year if sales increased by 10%.
Neman Marcus Group LTD LLC |
||
Budgeted Income Statement |
||
|
FY 2019 |
||
|
FY |
Budgeted |
|
|
2018 |
2019 |
|
| Revenues |
$4,900,444 |
$5,390,488.40 |
| Cost of Goods sold |
$3,320,753 |
$3,652,828.30 |
| Selling, general, and administrative expenses |
$1,179,641 |
$1,297,605.10 |
| Income from credit card program |
($46,361) |
($46,361) |
| Depreciation expense |
$214,452 |
$214,452 |
| Amortization of intangible assets |
$46,685 |
$46,685 |
| Amortization of favorable lease commitments |
$51,046 |
$51,046 |
| Other expenses |
$37,721 |
$37,721 |
| Impaired charges | ________ | |
| Operating earnings (loss) |
$96,507 |
$136,512 |
| Interest expense, net |
$307,441 |
$307,441 |
| Loss before income taxes |
($210,934) |
($170,929) |
| Income tax benefit |
($462,065) |
($462,065) |
| Net earnings (loss) |
$251,131 |
$291,136 |
|
Macy's Inc. |
||
Budgeted Income Statement |
||
|
FY 2019 |
||
| FY | Budgeted | |
|
2017 |
2018 |
|
| Net Sales |
$24,837 |
$27,320.70 |
| Cost of sales |
($15,152) |
($16,667.20) |
| Gross margin |
$9,685 |
$10,654 |
| selling, general, and administrative expenses |
($8,131) |
($8,944.10) |
| Gains on sale of real estate |
$544 |
$544 |
| Restructuring, impairment, store closing and other costs |
($186) |
($186) |
| Settlement charges |
($105) |
($105) |
| Operating income |
$1,807 |
$1,962 |
| Interest expense |
($321) |
($321) |
| Net premiums on early retirement of debt |
$10 |
$10 |
| Interest income |
$11 |
$11 |
| Income before income taxes |
$1,507 |
$1,662 |
| Federal, state, and local income tax benefit (expense) |
$29 |
$29 |
| Net income |
$1,536 |
$1,691 |
