Understanding Financial Statements: Company Performance, week (1-4) All Quiz Answers with Assignments


Understanding Financial Statements:                      Company Performance

Week 4 Assignment :


Throughout this course, we have characterized a company's income statement as a substitute attribute for its financial performance. With this in mind, select an annual report from one of the companies introduced during the course, and rate the company’s financial performance associated with the most recent income statement date in the report using a 0-10 scale, where “0” suggests a very weak performance and “10” suggests a very strong performance. (You can find the reports by clicking the “Module 1 Readings” link.)

Then prepare a 1-2 paragraph explanation for your performance rating. The explanation should not exceed 500 words in length.

Overall, by looking at Barnes & Noble’s financial report, it can be seen that the performance of the company was considerably ineffective for two reasons: low profits and high risk due to high liabilities. When it comes to company’s income, B&N recorded nearly $4 billion dollars in 2017, which slightly decreased from the counterparts in previous years. Cost of sales and administration together summed up to 98.61% of total sales. After the tax deduction, the remaining was approximately $22 million, accounted for only 0.6% of the total revenue. Even though this figure was seemingly better than the year before (loss 0.6%), it is still a very low profit that disappointed the stakeholders. The company suffered from the decreasing sales trend due to lower traffic and the challenging retail environment (according to the business review part of the statement). Besides low income, it is obvious that B&N had high level of leverage, which associated with high level of risk. The Debt ratio, calculated by dividing total debt to total assets, in 2017 was about 70.29%. To demonstrate, the average debt ratio of companies in paper and allied products industry in US was just 0.66 in 2017 (according to readyratios.com). Along with low returns, Barns & Noble is more likely to be in trouble when crises, such as Covid-19, happens. In conclusion, I think that the performance of B&N worth 4 points (below average) in 2017.


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