An Analysis of Companies' Performance through Using the Financial Statement of Data

An Analysis of Companies' Performance through Using the Financial Statement of Data

Introduction

In this study I am going to discuss financial statement analysis of five different companies (for financial details see appendix). But, major focus of this study is on GAP INC. first of all I would like to discuss how and when GAP Inc. started its business and emerged as one of the leading companies of the fashion world. Gap Inc. has been doing business, starting in San Francisco, since 1969. As the company grew and expanded, so did the company culture and charity contributions. Breaking through the barriers, and making an name for themselves, they grew to be one of the most world known and respected brands in the apparel industry. With an ever-growing market, staying in touch with their customer and moving forward with their product, this company has proved themselves as a company to contribute to the competition of the retail industry.

With an environmental analysis of the retail/specialty retail industry, it is discovered that culture trends are on a shift with the introduction of the Internet. People's lives continue to grow in business and industries alike must shift to ease the lives of their customers. Economically, it has been harsh the past couple of years with the threat of terrorism and whatnot. Yet, economist expect a pickup in the first half of 2004 since tax refunds and cuts in capital gains as well as dividend taxes is putting more money into the hands of consumers. Legally, this industry must keep in mind different government regulations as companies start to go global. Fair wages and factories is also a large concern. With the improvement of technology, people are able to order their products off the Internet at any location and time. This is one of the ways companies are adapting to the lives of their occupied customers.

Analysis of Profitability Measures, Liquidity, Performance, Asset Utilization and Capital Structure

The profit of a business is the difference between its revenues and its costs. It is important to consider two main types of profit:

1. Gross profit - this is calculated by deducting the cost of sales of a business from its sales revenue (turnover).

2. Operating profit - is calculated by then taking away overhead expenses from gross profit.

Given the above figures it is possible to analyze the profitability of GAP INC. in the two years. To do this we need to calculate how much of every Dollar spent by customers is profit.

Profitability

Using these profitability calculations we are able to compare business profits in one year compared with others, and also compare the profitability of different businesses. Another important measure of how well a business is being run is how liquid it is. To do this we need to look at the current assets and current liabilities in the balance sheet.

Working capital

We use the term working capital to describe the difference between current assets and current liabilities. A business has working capital if ...