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"Company A" Classification

I need to know if "Company A" a merchandising entity, service business or both? How would I be able to tell?

I would need to list the items on "Company A's" financial statements that influence the answer.

I would also need to compute "Company A's" gross profit for fiscal years 2001 and 2000. Can you tell if the gross profit increased or decreased in 2001? Would this be a good sign or a bad sign about the company?

How would I go about writing a brief memo to the investors advising them of "Company A's" trend of sales, gross profit, and net income. Would the long term outlook for "Company A" be favorable or unfavorable, based on the this trend.

The following information is what Company A reported, and what we will use to get our information.

Statement of Earnings

(in millions)

Fiscal years ended
Jan. 31st 2001 Jan. 31st 2000
net sales $11,862 $11,170

cost and expenses:

cost of sales $8,321 $8,191

other expenses $3,262 $3,111

net earnings (net loss) $ 279 $(132)

BALANCE SHEET

(in millions) Jan. 31st 2001 Jan. 31st 2000

Current Assets:

cash and equivalents $584 $ 410

accounts and other receivables $ 182 $204

merchandise inventories $2,027 $1,902

prepaid expenses and other
current assets $ 80 $81

TOTAL CURRENT ASSETS $2,873 $2, 597

Solution Preview

I need to know if "Company A" a merchandising entity, service business or both? How would I be able to tell?

I would need to list the items on "Company A's" financial statements that influence the answer.

I would also need to compute "Company A's" gross profit for fiscal years 2001 and 2000. Can you tell if the gross profit increased or decreased in 2001? Would this be a good sign or a bad sign about the company?

How would I go about writing a brief memo to the investors advising them of "Company A's" trend of sales, gross profit, and net income. Would the long term outlook for "Company A" be favorable or unfavorable, based on this trend.

The following information is what Company A reported, and what we will use to get our information.

Statement of Earnings

(in millions)

Fiscal years ended
Jan. 31st 2001 ...

Solution Summary

This solution is comprised of a detailed explanation to answer the request of the assignment of more than 200 words of text.

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