Profitability Measurements for Walmart, Target, & Costco
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Calculate the following profitability measurments for Wal-Mart, Target, and Costco using the information found in their 2013 Annual Reports. Calculations must be written out.
Gross Profit Percentage
Profit Margin Percentage
Return on Investment
Return on Equity
Earnings Per Share
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Solution Summary
These are definitions, directions and formulas for 5 profitability measures for 3 major companies, WalMart, Costco and Target, as found in their 2013 Annual Reports. The measures are:
Gross Profit Percentage
Profit Margin Percentage
Return on Investment
Return on Equity
Earnings Per Share
Solution Preview
These terms are defined in the website "Investopedia.com." Most of the data for the companies that are needed are in the Income Statements and Shareholder's Equity.
First you define the terms:
Gross Profit Percentage equals gross profit divided by total revenue.
Gross profit equals the revenue minus cost of goods sold.
Profit Margin Percentage is the net income divided by net sales, and it is a way to determine how much of the sales dollar is actually earned and retained by the company.
Return on Investment is the gain on an investment minus the cost of investment, divided by the cost of investment.
Return on Equity relates to common stock. It equals the net income minus preferred stock dividends, divided by common stock shareholder's equity
Earnings Per Share also relates to common stock. It equals the dividends to be paid minus the dividends on preferred stock, divided by the total number of shares of common stock outstanding.
Here are the data for each company (in millions), the formulas, and the calculation for the first company only. If preferred stock is not listed in the statements, then you don't have subtract it or the preferred dividends.
You can do the other two companies in the same way.
(Items to find - Walmart, 2013, pg 34-36)
Revenue page 34, first column (2013)
Cost of Goods sold page 34, cost of sales(2013)
Net Income page 34, consolidated income ...
Education
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- MBA, University of Phoenix
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