Finacial Analysis Staples & Office Depot

8276 words 34 pages
Table of Contents
Introduction
Overview of Staples, Inc. and Office Depot, Inc. ………………………………..……3
Case Objectives…….……………………………………………..………………..…….4
Financial Analysis
Common-Size Vertical Analysis & Comparative Horizontal Analysis
Common-Size Balance Sheet ….…………….……….……………..….……….4
Common-Size Consolidated Statement of Income…………….………..……. 5
Comparative Balance Sheet ….…………….……………………………..…….6
Comparative Consolidated Statement of Income……..……..……………….. 7
Financial Ratio Analysis
Liquidity Ratios….………..………………………………………………..…….8
Long-Term Debt – Paying Ability………………………..…..………………..10
Profitability & Investor Analysis………..……………….…………….………11
Conclusion & Recommendation……………………………………………………………….13
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Office Depot cash increased remarkably from 2.96% to 13.49% from 2008 to 2010. For the same period, receivables declined slightly while inventories grew from 25.28% to 26.52%. Common-Size Consolidated Statement of Income Vertical analysis of the profit and loss accounts is based upon sales. Every variable in the income statement for a particular year is computed as a percentage of the total sales or revenue for that same year. The common size income statement of Staples shows a relative rise of the cost of revenue (cost of goods sold and occupancy cost) from 71.3% to 73.3% from 2008 to 2010. Putting the three year period into perspective, the average cost of revenue would be 72.5%. If we have to compare this variable with that of the report from Office Depot, we will realize a difference as the average cost of revenue in ODP is at 71.86%. Therefore average gross profits for Staples would be 27.5% meanwhile that of ODP would be 28.14%. The average operating expense for Staples is at 20.29% and an average operating income of 6.54%, meanwhile for ODP the analysis shows an average operating profit of -4.39% indicating a loss. There have been losses instead for the 3 year period of ODP in terms of operating profit, however the trend shows a decline in the loss from -10.66% to -0.32% from 2008 to 2010, which is positive for the company. The income taxes are another important variable to be compared for

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