You Are Interning at a Financial Services Firm and Have

question 52

Essay

You are interning at a financial services firm and have been asked to evaluate the performance of two major department stores.The following information (in millions)is available for Walmart and Nordstrom for the most recent fiscal periods available:
Walmart
$\begin{array}{lrr}\text { Net sales } & \$ 405,046& \text { Beginning accounts receivable } & \$ 4,144 \\\text { Gross profit } & 100,389& \text { Ending accounts receivable } & 3,905 \\\text { Operating income } & 23,950 \\\text { Net income } & 14,848\end{array}$
Nordstrom
$$\begin{array} { l r r } \text { Net sales } & \$ 8,627& \text { Beginning accounts receivable } & \$ 1,942 \\\text { Gross profit } & 3,299 &\text { Ending accounts receivable } & 2,035 \\\text { Operating income } & 834 & \\\text { Net income } & 441 & \\\hline\end{array}$$
Compute the (1)gross profit margin,(2)operating margin,(3)net profit margin,and (4)accounts receivable turnover for the two companies and indicate which company has performed better.

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Definitions:

Rate of Return

The financial return or shortfall from an investment across a defined span, shown as a percentage of the investment's original price.

Rate of Return

The upward or downward movement in an investment's value, measured across a specific interval, and expressed relative to the investment's initial value.

Cumulative Gain

The total amount of gain or profit accumulated over a specific period of time.

Rate of Return

The percentage of profit or loss on an investment over a specified period.