workbook for analyzing many companies

Best Buy Co. Inc.

You can use this workbook for analyzing many companies and saving your analysis for each one, like many professionals.   Just like them, over time, you can compare a company’s actual performance to your analysis and predictions.  Saving your analysis sheets can help sharpen you analytical skills.

The questions in the workbook are numbered the same way as they are in the book, ‘Getting Underthe Hood of an Annual Report’.  As there are no questions in the first chapter of the book, the workbook starts with Chapter 2.  It will make it easier for you to relate the questions in the workbook to those in the book.

Your input to the workbook will appear in a dark green font while the questions appear in blue.  The different font colors can make it easier for you to see your work.

You’ll need to do some number crunching to complete your annual report analysis.  The Big Calculating Tool, located on your CD, can save you a great deal of time and make the number crunching nearly painless.  Every ratio and calculation for the book is included in the Big Calculating Tool. You’ll have more time for analysis if you use the Big Calculating Tool.

Table of Contents

Chapter 2    4
Question 2.0 – What do you want to learn about company and why?    4
Question 2.1 – Fundamental Information Set For Your Company    4
Question 2.2 – The Marketplace Context    5
Question 2.3 – Challenges and Success for Your Company    6
Chapter 3    8
Question 3.1 – What is Management saying about your company?    8
Question 3.2 – What did the Chairman say?    9
Question 3.3 – Internal Controls and Auditors    10
Chapter 4    11
Question 4.0 – What is your company’s fiscal year    11
Question 4.1 – Current Assets    11
Question 4.2 – Property, Plant and Equipment    11
Question 4.3 – How good is the Goodwill    12
Question 4.4 – Current Liabilities    13
Question 4.5 – How much stock is there and who owns it?    13
Question 4.6 – Who owns the stock?    13
Question 4.7 – First look at the company’s strength    14
Question 4.8 – Significant changes in the balance sheet    15
Question 4.9 – Significant changes in the cash account    15
Question 4.10 – Debt to equity and the competition    15
Question 4.11 – ‘Income statement’.  What’s in a name?    16
Question 4.12 – How does your company report the core business?    16
Question 4.13 – How does your company describe its business income?    17
Question 4.14 – Irregular items.  Good or Bad?    17
Question 4.15 – The big questions.  Are they makin’ money? Are they lookin’ good?    18
Question 4.16 – Which trend is important and why?    19
Question 4.17 – How strong is your company’s cash position?    19
Question 4.18 – How well can your company pay its bills?    20
Question 4.19 – How leveraged is your company?    21
Question 4.20 – How well does your company invest in its future?    22
Question 4.21 – Capital and Treasury Stock    22
Question 4.21 –Basic information about your company not found on the financial statement?    23
Question 4.22 –Other significantion information about your company not found on the financial statement?    23
Chapter 5    25
Question 5.1 – Working Capital Balance    25
Question 5.2 – Acid Test or Quick Ratio    25
Question 5.3 – Current Ratio    26
Question 5.4 – Cash Ratio    27
Question 5.5 – Return on Sales Ratio    28
Question 5.6 – Return on Equity Ratio    28
Question 5.7 – Return on Assets Ratio    29
Question 5.8 – Asset Turn Ratio    30
Question 5.9 – Gross Profit Margin Ratio    30
Question 5.10 – Inventory Turnover Ratio    31
Question 5.11 – Days in Inventory Ratio    32
Question 5.12 – Accounts Receivable Turnover Ratio    33
Question 5.13 – Average Collection Period    33
Question 5.14 – Accounts Payable Turnover Ratio    34
Question 5.15 – Net Working Capital Turnover Ratio    35
Question 5.16 – Debt to Equity Ratio    36
Question 5.17 – Debt to Asset Ratio    37
Question 5.18 – Gearing Ratio or Long Term Debt to Shareholders’ Equity Ratio    37
Question 5.19 – Interest Coverage Ratio or Debt Service Ratio    38
Question 5.20 –Earnings per Share    39
Question 5.21 – Price/Earnings Ratio    39
Question 5.22 –Dividend per Share    40
Question 5.23 – Dividend Payout Ratio    41
Chapter 6    43
Question 6.0 – Calculate the Altman Z-Score    43
Question 6.1 – What did you learn about your company    43
Question 6.2 – Would you buy, sell, hold or stay away    43

Chapter 2

Question 2.0 – What do you want to learn about company and why?

2.0 – What You Want To Learn About the Company and Why?
Priority    What do you want to learn?    Why do you want to learn it?
A    Has Best Buy stock prices increased or decreased over the past 3 years?    Stock prices on the incline are a good indicator of a company’s performance.
B    Has revenue increased or decreased?    With a lot more shoppers turning to the internet has my company been able to compete?
C    Has the company’s upper management team changed over the past few years?    A frequent shift in management often symbolizes poor company performance.
D    What is the average net income of the company?    Another way to rate performance on my company.
Question 2.1 – Fundamental Information Set For Your Company
The answer to the following questions may be found in either the Annual Report to Stockholders or on the SEC Form 10-K.  It may also be necessary for you to use other sources.   To fully answer the questions, you must identify the source for your information and also include the answer.  If the question is not applicable to your company, place “NA” as the answer.  To identify the source use “AR” for Annual Report to Stockholders and “10K” for the SEC Form 10-K.  If something else, use “Other” and include the identification at the end of your answer.

2.1 – Fundamental Information Set For Your Company

Question    Source    Answer

A    What is the official company name?    10K    BEST BUY CO., INC.
B    What is Company headquarters address?    10K    7601 Penn Avenue South
Richfield, Minnesota
C    What is the Executive Office telephone number?    10K    612-291-1000
D    What is the Investor Relations telephone number?    Other    (866)758-1457, www.BestBuy.com
E    What is the official company website?    Other    www.BestBuy.com
F    What is the fiscal year ending date?    Other    Starting in 2013 Best Buy Co., Inc. has changed its fiscal year to end on the Saturday closest to end of January. , www.BestBuy.com
G    State of incorporation    10K    Minnesota
H    What government agency, other than the SEC, has a significant impact on your Company?        NA
I    What is the trading symbol for your Company’s common stock?    Other    BBY, www.marketwatch.com
J    Which stock exchange lists the common stock for your Company?    Other    NYSE, www.Marketwatch.com
K    What is the name of the stock transfer agent for your Company?    Other    Computershare, www.bestbuy.com
L    What is the Par Value for the common shares of your Company?    10K    $.10
M    What is the number of common shares outstanding?    10K    342,198,524
N    In the past 3 years what is the highest trading price for the common stock for your company.    Other    $48.58 , www.marketwatch.com
O    In the past 3 years what is the lowest trading price for the common stock for your company?    Other    $14.81, www.marketwatch.com
P    How many members are on the Board of Directors?    Other    9, www.bestbuy.com
Q    How many Board Members are present or past employees of the Company?    Other    1, www.bestbuy.com
R    How many are Board Members are from outside your Company?    Other    8, www.bestbuy.com
S    Which companies or institutions do the outside Board Members represent?    Other    The Travelers Companies, Inc., Centera Corporation, Center for Ethical Business Cultures, Kraft International Commercial, Caterpillar Inc. , www.bestbuy.com
T    How many subsidiaries are directly or indirectly controlled by your Company?    Other    4, www.mashable.com
U    How many subsidiaries have jurisdictions outside the United States?    Other    1, www.mashable.com
Question 2.2 – The Marketplace Context
If analyzing a company’s performance were only about the numbers, predicting the performance of a company would be easy.   Performance, success and failure are outcomes that are affected by the marketplace.  Your company does not exist inside a vacuum.  It lives alongside other companies actively struggling to protect existing customer relationships and working to create new customers.   Often companies will compete for the same customers.  For some companies the competitors are easily identifiable.  Your company’s SIC code can help you identify its competitors.  They will have the same SIC code. Other companies compete indirectly with alternative products or technologies making it difficult to identify competitors.  Consider FedEx with both direct and indirect competitors.

The answer to the following questions may be found in either the Annual Report to Stockholders or on the SEC Form 10-K.  It may also be necessary for you to use other sources.  To fully answer the questions, you must identify the source for your information and also include the answer.  If the question is not applicable to your company, place “NA” as the answer.To identify the source use “AR” for Annual Report to Stockholders and “10K” for the SEC Form 10-K.  If something else, use “Other” and include the identification at the end of your answer.

2.2 – The Marketplace Context

Question    Source    Answer

A    What is the Standard Industrial Classification and the SIC Code for your company?  List all that may apply?    Other    Retail- RadioTv& Consumer Electronics
The SIC code is 5731
www.sec.gov

B    What is the company’s primary product, product group or business segment?    10K    Home Electronics
C    Is there a single customer that accounts for more than 10% of total net sales?        NA
D    What is the major customer profile for your company?    Other    Young Tech Enthusiast, http://www.washingtonpost.com/wp-dyn/content/article/2005/08/16/AR2005081601906.html
E    Is there a competitor larger than your Company?    Other    No
www.money.cnn.com
F    Which company is the most significant competitor for your Company?    Other    Amazon
www.money.cnn.com
G    What is the country of origin for this competitor?    Other    USA
www.amazon.com
H    During the past 2 years, has your Company launched a significant new product or service?  If yes, what is the product or service?    Other    Yes,
The Buy Back Program
www.bestbuy.com
I    During the past 2 years, has your company entered a new market?  If yes, what is the market and where is located?    Other    No
http://www.zdnet.com/best-buys-q2-highlights-challenges-facing-new-ceo-7000002939/
J    During the past 2 years, has your Company launched a new technology?  If yes, what is it?    Other    No
http://www.zdnet.com/best-buys-q2-highlights-challenges-facing-new-ceo-7000002939/
K    What are the technological issues for your Company?   How are they described?    Other    Best Buy faces technological issues of meeting online orders shipping times. Last year they failed to fulfill many online orders. Hopefully this year changes.
http://usatoday30.usatoday.com/money/industries/retail/story/2012-01-11/best-buy-cancelled-orders/52521568/1

Question 2.3 – Challenges and Success for Your Company
Review the Annual Report for Stockholders and the Form 10-K for your company.   Using the above list of Marketplace Issues, identify the marketplace issues affecting your company.  Your company is large enough to be newsworthy.   Most likely, the issue you identified in the Annual Report for Stockholders or the Form 10-K might be reported elsewhere.  With research apart from the Annual Report for Stockholders and the Form 10-K you may be able to find additional information about the issue.   There are several print media research sources available in the library:
1.    Wall Street Journal
2.    New York Times
3.    Barron’s
4.    Moody’s Complete Corporate Index
5.    Standard and Poor’s Industry Guide

The Internet makes a vast universe of material available to you.  It is fast and convenient.  The chances are remote that you will not be able to discover sufficient information to satisfy your needs. Use your favorite search tool and start digging.

Your company is a good place to start.  Their website may have relevant press releases about the issue.  Some of the officers may have made speeches or written articles about it.

Describe the significantmarketplace issues identified in the Annual Report for Stockholders and the Form 10-K for your company.  For each issue:

  1.  Include the marketplace category.
    2.    The description of the issue as it appeared in the Annual Report for Stockholders and the Form 10-K for your company.
    3.    Your interpretation of its significance to the company, what the importance is to the company and if management is capable of creating a positive outcome.

2.3 – Challenges and Success for Your Company
Marketplace Issue    Description of the Issue    Significance
A    New Officers    New CEO    The directors appointed Hubert Joly as CEO, in an attempt to turn around the hurting company.
B    Officer Retirement    New search for CFO     The announcement of the old CFO allows the fresh faces of the management team to turn the company around.
C    Plants and Equipment    Reduction of stores    This is predicted to slash $800 million in expenses.
D    New Officers    New Vice President of Best Buy and president of Online Commerce.    Best Buy being the world’s 11th largest online retailer, it’s no doubt that the new VP of Best Buy will bring change for the better to the online experience.

Chapter 3

Question 3.1 – What is Management saying about your company?
When reading the Management’s Discussion and Analysis of Operations and Financial Condition (MD&A) asking each of the following questions will help to identify a significant fact that will help you understand your annual report.   Pick anitemreported in the MD&A which you believe to be significant and ask yourself:

  •  What is it?
    •    When did it occur?
    •    Where did the action take place?
    •    Who was involved?
    •    Why did this happen?
    •    How did it happen

Answer as much of the five Ws and one H as you can from the annual report.  Next, use the internet and other printed media sources to get additional information about the item.  From the combined sources you should be able gather a reasonably complete assessment of the item.

Identify the source of your outside material.

Use the following template to complete your answers.

3.1.1 – What is Management saying about your company?
Copy the item from the MD&A and paste it below.

3.1.2    Five Ws and One H    Form 10-K MD&A    Outside Source Material
Paste information from the 10K in this column.    Paste information from outside sources in this column.  Include the source link.
A    In your own words describe the item?    Restructuring of international business operations    Opening up of new mobile stores in US
B    When did it occur?    2011    2011
C    Where did the action take place?    China, Turkey & UK    USA
D    Who was involved?    International division    USA Division
E    Why did this happen?    Economic losses from international stores    To drive growth of tablets and mobile phones
F    How did it happen?    Higher cost of capital and competition in international market    Increase in demand for tablets led to strategic decision to operate specialized mobile stores
G    In your opinion, what do you believe is the importance of this item to your company?  How will it impact the company?    The company has lost international footprint, and thereby revenue base may be less diversified than before.  However, growth in mobile segment may cover up for loss in revenues

Question 3.2 – What did the Chairman say?
Read the Chairman’s Message in the Annual Report to Stockholders for your company. You might also find the Chairman’s message in the company’s annual proxy statement.  Identify the issues and events outlined in the Message.  Highlighting the text of the issues and events can help assess their significance and prioritize them.

3.2.1 – What did the Chairman say?
A    In your opinion, what is the most significant issue in the Message?       Growth in the future will come from mobile stores, ecommerce, and greater reliance on US stores – while cutting down costs by USD800mn over next few years
B    Quote the Chairman’s description of the issue?
We had strong growth in our online channel and in strategically critical connectable products such as mobile phones and tablets. We exercised prudent capital allocation, expense control and operational efficiency.
C    What is the significance of the issue for the company?    Highly significant as it will drive growth in the future
D    Did the Message include a solution for the issue?  If yes, what was it?    Yes, opening up more stores
E    Did the solution instill confidence in you?    Yes – opening up more stores will increase footprint of firm
F    If yes, why?  If no, why?    Higher number of locations to do business

The Chairman’s Message is read by a wide and diverse constituency.  Select a group of constituents excluding stockholders, investors and financial analyst.  Write your opinion of how you believe they will react to the Chairman’s message.  Select one from the following constituents.

Creditors    Regulatory agencies    Competitors
Employees    Local and state governments    Suppliers
Salespeople    Foreign governments    Vendors
Franchisees     Environmental activists    Distributors
Unions    Consumer advocates    Customers
Human rights advocates    Press and media
Regulatory agencies

3.2.2 – What did the Chairman say?
A    Constituent’s name    Creditors
B    With respect to the company, is the constituency supportive, neutral or adversarial?     Supportive
C    What issue in the Chairman’s message will cause the greatest reaction?    The opening up of new stores, and how the stores will be funded
D    How do you believe the constituency will react to the issue?    The creditor will evaluate the capital structure, and then assess whether incremental funds can be sanctioned to BestBuy or not
E    Why do you believe they will react that way?    In order to prudently allocate capital
F    Will their reaction create a positive or negative impact on the Company? What will be the impact and why?    Neutral impact on the company given stable financial metrics of BestBuy
Question 3.3 – Internal Controls and Auditors
Information about the company’s compliance with SOX can be found in SEC Form 10-K. The section called Controls and Procedures includes information about how the company is complying with the SOX reporting requirements.Generally preceding the section on Controls and Procedures is the Report of Independent Registered Public Accounting Firm. It will also contain information about internal controls and auditors.  Review these sections of your company’s SEC Form 10-K and answer the following questions.

3.3 – Internal Controls and Auditors
A    Who in your company is responsible for the internal disclosure controls and procedures?    Audit Committee
B    Who are members of the Audit Committee?    James H. Muehlbauer
C    What is the name of the independent auditor for your company?    Delloite&Touche
D    What was the auditor’s opinion of the consolidated financial statement?    Unqualified
E    What was the auditor’s opinion of the internal disclosure controls and procedures?    Unqualified

Chapter 4

Question 4.0 – What is your company’s fiscal year

4.0 – What is your company’s fiscal year?
A    When does your company’s fiscal year end?    March
B    In your opinion, why did your company select this date to end its fiscal year?    To account for seasonal impact of Christmas/Holiday season sales
Do competitors use the same fiscal year as your company?    Yes

Question 4.1 – Current Assets
Some companies have current assets other than Cash, Short Term Investments, Accounts Receivables and Inventories. Locate the Current Asset section of the Balance Sheet for your company and review the current asset categories.

What categories of current assets, other than Cash, Short Term Investments, Accounts Receivables and Inventories are reported by your company?  What is their significance to the company?  Mark your answer “NA” if your company does not report current asset categories other than Cash, Short Term Investments, Accounts Receivables and Inventories.

4.1 – Current Assets
Current Asset Category    Significance
A    Other Current Assets    Includes all prepaid expenses, and other current assets which could not be incorporated in cash, short term investments, receivables, and inventories
B
C
D

Question 4.2 – Property, Plant and Equipment
Some companies have categories for Property, Plant and Equipment other than land, buildings, factories, furniture and equipment.   What categories of Property Plant and Equipment other than land, buildings, factories, furniture and equipment are reported by your company?  What is it their significance to the company?  Mark your answer “NA” if your company does not report categories of Property Plant and Equipment other than land, buildings, factories, furniture and equipment.

4.2 – Property, Plant and Equipment?
Property Plant and Equipment Category    Significance
A    Property under Capital Lease    Does not have much significance, as it makes up less than 3% of total long term assets.
B
C
D

Question 4.3 – How good is the Goodwill
Goodwill is a balance sheet item reported by many companies. The details of the Goodwill are generally described in the Notes to the Financial Statement.  Goodwill should reflect the strategic future value of an acquisition.   Mark your answer “NA” if your company does not report Goodwill.

4.3 – How good is the Goodwill?
A    Does your company report Goodwill?    Yes
B    What is the value of the Goodwill?    USD1.335bn
C    What is the ratio of Goodwill to Total Assets (Goodwill ? Total Assets)?    8.34%
D    In your opinion why is the ratio of Goodwill to Total Assets significant or insignificant?    It is not significant as it is less than 10%, and is not material
E    What was the source of the Goodwill?    Goodwill is associated with BestBuy Europe, and acquisition of mindSHIFT
F    In your opinion why was the acquisition justified or not justified?    Acquisition was justified, as it expanded the company’s product and service base

Question 4.4 – Current Liabilities
Some companies have current liabilities other than Accounts Payable, Accrued Salaries and Wages and Accrued Income Tax. Locate the Current Liabilities section of the Balance Sheet for your company and review the current liability categories.

What categories of current liabilities other than Accounts Payable, Accrued Salaries and Wages and Accrued Income Tax are reported by your company?  What is it their significance to the company?  Mark your answer “NA” if your company does not report current liability categories other than Accounts Payable, Accrued Salaries and Wages and Accrued Income Tax.

4.4 – Current Liabilities
Current Liability Category    Significance
A    Unredeemed Gift Card Liabilities    Amountin to USD456m, they pertain to gift cards which have not been used by consumers but have been paid for.
B    Short Term Debt    Debt raised by the company generally to support working capital requirements – it is significant as it supports cash requirements when required
C    Current Portion of Long Term Debt    The amount of debt associated with long term debt which has to be paid within 12 months.
D

Question 4.5 – How much stock is there and who owns it?
The equity structure is a significant aspect of a public company.  It can have a dramatic impact on stock price movement and appreciation.  Review the SEC Form 10-K and Annual Report to Stockholders and answer the following questions.

4.5 – How much stock is there and who owns it?
A    What is the par value of the common stock?    USD0.1
B    What is the number of shares outstanding?    392,590,000
C    What is the current listed market price for the common stock?    USD13.75 per share
D    What is the number of common shares authorized?    1,000,000,000
E    What is the number of treasury shares?    N/A

Question 4.6 – Who owns the stock?
Knowing who owns large blocks of stock can be useful information when assessing the investment value of a company.  The percent ownership of a company will determine the amount of control a shareholder has over the company.  In a democratic election, each citizen has only one vote.  In a corporate election, each shareholder gets one vote for each share of stock the shareholder owns.  A shareholder with 1million share gets 1million votes while a shareholder with 10 shares gets only 10 votes.  In a company with 3million shares outstanding, the shareholder with 1million shares has much more influence and power than the shareholder with 10 shares.
Proxy Statement
The company’s annual proxy statement will disclose the number of shares owned by the each member of the Board of Directors.  It will also identify all shareholders who own 5% or more of the common stock and voting stock of the company.  The annual proxy statement must be filed with the Securities Exchange Commission using Form DEF 14a, the definitive annual proxy statement.

4.6 – Who owns the stock?
A    How many shares are held by Officers and Directors?  What does this tell you?    Less than 1% – the directors other than founder do not have any significant holdings.
B    Who is the largest stockholder? What does this tell you about the company?    Schulze (Richard M) – He is the founder of BestBuy and continues to be the largest stockholder, implying strong influence over the firm
C    What other classes of stock are outstanding?    N/A

Question 4.7 – First look at the company’s strength
The balance sheet is a snapshot of the company financial strength.  Endurance and strength are important when attempting to assess an athlete’s ability and it is the same for a public company.  The first place to look for a company’s endurance and strength are the current and previous year balance sheets.

Calculate the percent increase or decrease in each of the following balance sheet accounts.  Place the percentage in parenthesis is it is negative.

4.7 – First look at the company’s strength
Current Year    Previous Year    Percent Change
A    Cash and cash equivalents     USD1,199m    USD1,103    8.7%
B    Accounts Receivable    USD2,288m    USD2,348m    2.55%
C    Inventory    USD5,731m    USD5,897m    2.81%
D    Property, plant  & equipment    USD3,471m    USD3,823m    9.2%
E    Accounts Payable    USD5,364m    USD4,894m    9.6%
F    Accrued Salaries    USD539m    USD570m    5.43%
G    Accrued Income Tax    USD288m    USD256m    12.5%
H    Long term debt    USD1,685m    USD711m    136.9%
I    Common Stock    USD34m    USD39m    12.82%
J    Treasury Stock    N/A    N/A
K    Retained Earnings    USD3,745m    USD6,372m    41.22%

Question 4.8 – Significant changes in the balance sheet
In your opinion, what were the two most significant changesin the company’s balance sheet between the current year and the previous year?  What were the two balance sheet accounts?  Why do you believe they are significant?

4.8 – Significant changes in the balance sheet
Balance Sheet Account    Why the change was significant?
A    Increase in Long Term Debt    Increase in debt to support capital structure, resulting in higher leverage
B    Decrease in Retained Earnings    Increase in net losses, and dividends paid decreased equity levels and increased leverage

Question 4.9 – Significant changes in the cash account
Cash is an important part of a business.  Some people say, “Cash is king.”  Describe the change in the Cash and Cash Equivalent account between the current year and the previous year.  In your opinion why was it or was it not significant?

4.9 – Significant changes in the cash account
Change in the account    Why the change was significant?
Marginal change    Cash levels largely remained static, and increase was mainly due to change in business volumes
Question 4.10 – Debt to equity and the competition
The debt load for a company may or may not be a burden.  It can become a competitive detriment when the debt service it too large or when the company’s ability to borrow is too retrained.   It could also create vulnerability if the company’s chief competitor has the borrowing strength to “buy market share.”   What is the current ratio of total debt to total stockholder’s equity for your company’s most significant competitor?  What is the current ratio of total debt to total stockholder’s equity for your company?   Has the ratio changed between the current year and the previous year for your company?    Why or why not was the change in the ratio significant?

4.10 – Debt to equity and the competition
A    What is the current ratio of total debt to total stockholder’s equity for your company’s most significant competitor?    RadioShack – 0.91
B    What is the current ratio of total debt to total stockholder’s equity for your company?    0.5896
C    Has the ratio changed between the current year and the previous year for your company?      Yes
D    Why or why not was the change in the ratio significant?    Significant change due to increase in debt, and significant decrease in equity

Question 4.11 – ‘Income statement’.  What’s in a name?
The income statement is a report of the company’s revenue and expenses.   Companies have been using the report for almost a hundred years.  Over the years, accountants have adopted different names for the income statement.  What name does your company use for the income statement?  In your opinion why do they use it instead of ‘income statement’?

4.11 – ‘Income statement’.  What’s in a name?
A    What name does your company use for the ‘income statement’?    Statement of Earnings
B    In your opinion, why do they use it?    To signify earnings
Question 4.12 – How does your company report the core business?
Often, a company will use terms closely related to their core business when describing the line items in the operational section of the income statement.  Some standard descriptions for the line items in the operational section of the income statement are:
•    net sales
•    cost of goods sold
•    gross profit
•    general administrative expense
•    operating income
How does your company describe the items in its operating section of the income statement?  Does the company use descriptions other than net sales, cost of goods sold, gross profit, general administrative expense and operating income?  Why do you believe they use them?  What does it tell you about the core business for the company?  Mark your answer “NA” if your company did not unique operating section descriptions.f

4.12 – How does your company report the core business?
Item descriptions    In your opinion, why is it used?
A    Revenue    To signify revenue earned, rather than net sales
B    Selling, General & Administrative Expenses    Clubs all overheads under one single head
C
D
E
F    What does it tell you about the core business for t