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 $3 642 937 $23 191 455 $1 491 783 $16 854 249 Less: Cost of goods sold Gross margin $2 151 154 $6 337 206 Less: SG&A expenses $1 442 728 $3 890 144 $708 426 $2 447 062 Operating profit margin Less: Interest expense $48 578 $35 648 Other income $5 099 $0 $664 951 $2 411 414 Net income before taxes Less: Taxes $255 761 $915 324 Net income after taxes $439 190 $1 496 090 Balanco Shoot Balanco Shoot Cash $433 954 $1 507 112 Accounts receivable $184 085 $204 304 Inventory $2 073 212 $2 950 523 Other current assets $198 424 $470 693 Total current assets $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