Finanical Analysis

11 Pages 2685 Words

s, employing 110,000 associates in 46 states, the District of Columbia, and Puerto Rico The department store divisions collectively serve 127 markets totaling 162 million people in 36 states and the District of Columbia. Each holds a leading position in its respective markets. The Bridal Group has stores in 45 states.



Financial Ratio



May Department Stores Company debt-to-capitalization and fixed-charge coverage ratios are consistent with their capital structure objective. May Department Stores Company capital structure provides them with substantial financial and operational flexibility, debt-to-capitalization ratios were 46%, 48%, and 51% for 2003, 2002, and 2001, respectively. May Department Stores Company fixed-charge coverage ratios were 2.6x in 2003, 2.8x in 2002, and 3.5x in 2001. Restructuring charges reduced the fixed charge coverage ratio by 0.9x in 2003 and 0.3x in 2002.



Profitability Ratio: (in millions)

Gross profit margin ratio is calculated 3,965/13,343 = .29 in 2003, 4,028/13,491 = .30% in 2002 and 13,883/9,632 = .69 in 2001. The last two years indicates a consistent trend slightly below the industry range of .33.13. The decrease in net sales from 2002 to 2003 shows the decrease in consumer confidence and the continued war on terrorism. These events resulted in a difficult retailing environment, which had an adverse impact on the entire industry sales volumes.



Net profit margin ratio is calculated 434/13,343 = .03 in 2003, 542/13,491 = .04 in 2002 and 703/13,883 = .05 in 2001. The last three years shows a downward trend, resulted in a difficult retailing environment, which had an adverse impact on the company’s sales volumes. Other decrease in sales was caused by implemented initiatives to improve productivity.



Efficiency Ratio: (in millions)

Return on Net Assets Return on net assets measures performance independent of capital structure. Return on net assets is pretax e...