Date: March 2017 Overview Assume that you are the loan officer for Macy\'s, Inc.

Question

Date: March 2017 Overview Assume that you are the loan officer for Macy's, Inc. The firm has just presented you with its financial statements for the year 2016. Note that the firm's fiscal year ends in January. Use this information to perform the analysis noted below and answer the following questions. You note that investors in Macy's stock (symbol M) have not been enthusiastic as the share price fell from over $40 at the beginning of 2016 to just $23 in the Spring of 2017 The firm reported a drop in net income for the year. Identify two likely causes. Construct a cash-based income statement for 2016 using the framework provided in the chapter on commercial lending and appearing in the power point slides for the class. Complete the analysis through the item 'Cash before external financing. NOTE: Do not focus on getting the statement to balance. Incorporate all the information available to the best of your ability and focus on interpreting the data. Compare the firm's cash flow from operations with its mandatory expenditures (cash dividends + principal payments on debt) Calculate the impact of each of the following on either increasing or decreasing cash flow from operations. Summarize the total impact of changes in these current assets and liabilities on cash flow from operations. a. Accounts receivable b. Prepaid expenses & other current assets c. Merchandise accounts payable d. Accounts payable and accrued liabilities 1. 2. 3. 4. 5. How much did the firm spend on capital expenditures for the year? Show your work. 6. Did the firm borrow more via long-term debt or pay down long-term debt? Cite amounts.

Explanation / Answer

Inventory turnover = cost of goods sold/average inventory
cost of goods sold for =16496mn
Average inventory=(5506+5417/)2=5461.5mn
Inventory turnover =16496/5461.5=
3.02

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