Financial Analysis

Abstract

Retail Industry has been going through a series of turmoil after the Recession, but after that, things have improved a lot for this industry. This is due to the increased purchasing power of the customers and increased cost-cutting measures taken by these companies to solve their problems. Thus, we are going to do a financial analysis of these companies and find out, in which we should invest. The two companies for our research are Ross and TJX.

Table of Contents

Introduction4

Apparel Industry4

Discussion4

Description of TJX and Ross4

Objective5

Verical Analysis5

Income Statement5

Balance Sheet5

Horizontal Analysis6

Income Statement6

Balance Sheet6

Ratios7

Current Ratio7

Acid-Test Ratio7

Receivables Turnover7

Inventory Turnover7

Asset Turnover7

Rate Of Return On Assets7

Rate Of Return On Common Stock Equity7

Earnings Per Share8

Payout Ratio8

Book Value Per Share8

Conclusion8

Financial Analysis

Introduction

Apparel Industry

It has been the case that many of the companies after 2008 recession bankrupted. However, many of the company, which went on with their strategies and pursued their goals strongly, not only got out of the recession but also maintained a good growth. The United States retail apparel and home fashion related merchandise account for approximately 13,000 stores in the USA. This industry generate around $ 150 billion revenue for this sector. This industry of apparel and home fashion merchandises is very concentrated since 50 of the top big companies, take around 65 % of the total revenue in their pockets. Many of the companies in this industry have a specialized operation and control a niche market of customers (Bragg, 2002). They target as per the plan that is man, women and children. Most of the companies cater to all the need of these gender and age group. The size of the these companies differ greatly some are small boutique while some are middle sized companies with few outlets in each state and while some are big power houses who have got large retail outlets with international presence.

This sector is a good source and contributes one of the highest taxes to the national exchequer. After the 2009 recession, this industry has changed a lot. All of them have made major step to reduce their operating expenses at same time taking aggressive steps to increase their overall sales. The major step which were taken in this industry were the reduction in the advertising budget, reduction in the premium priced products and massive increase in the coupon sales. In USA there are around 48 publicly trades companies in relation to apparel. The top five publicly traded companies in this sector are TJX, The GAP, Ross Stores, Footlocker and Coach. In 2009, the industry saw massive cost cutting measures introduced, inventories were lowered and capital spending was decreased to offset the decline in the sales. Now the companies have improved in term of margins, overall sales and productivity.

Discussion

Description of TJX and Ross

The companies that I have chosen for my financial analysis are The TJX Company and Ross stores. Ross Stores operates two chains of retail apparel and home accessories stores. At the end of Fiscal year 2012, the company operated around 1,125 stores in United States ...