CASE 15 Tiffany & Co. and TJX: Comparing Financial Performance

1. Calculate the following for both Tiffany and TJX using data from the abbreviated income statements and balance sheets in Exhibit 1.
   1. Gross margin percentage
   2. SG&A expense percentage
   3. Operating profit margin percentage
   4. Net profit margin (after taxes) percentage
   5. Inventory turnover
   6. Asset turnover
   7. Return on Assets (ROA) percentage
2. Compare and contrast the calculated financial figures for Tiffany and TJX. Analyze and discuss why the percentages and ratios differ for the two retailers.
3. Analyze which retailer has the better overall financial performance.
4. Why is ROA a good measure of a retailers financial performance?

Tiffany (Year Ending 1/31/2012) TJX (Year Ending 1/28/2012) Income Statement Income Statement Net sales $23 191 455 $3 642 937 $1491783 $16 854 249 Less: Cost of goods sold Gross margin $6 337 206 $2 151 154 $1442 728 $708 426 $3 890 144 $2 447 062 Less: SG&A expenses Operating profit margin Less: Interest expense $35 648 $48 578 $5 099 SO Other income Net income before taxes $664 951 $2 411 414 Dess: Taxes $915 324 $255 761 $439 190 Net income after taxes $1 496 090 Balance Sheet Cash $433 954 Balance Sheet S1507112 $204 304 Accounts receivable $184 085 $2073 212 $2 950 523 Inventory Other current assets Total current assets $198 424 $470 693 $2 889 675 $5 132 632 Fixed assets $767 174 $2 706 377 Long-term assets $502 143 $442 596 Current liabilities $626 677 $3 063 423 Long-term liabilities $186 802 $2 008 892 Stockholders' equity $2 348 905 $3 209 290