Using Macy's 2020 Annual Report

This project will involve reading and analyzing information from the annual report (form 10-K) of Macys Inc.

The cover page of the 10-K is found on page 6 of the PDF file. The index for the financial statements is found on page 64 of the PDF file (printed page number F-1). All answers to questions except question 1 will be found in the financial statements (pages 69-73), Note 1 (Organization and Summary of Significant Accounting Policies) from the notes following those statements (pages 74-79), and the report of the outside auditor (Independent Registered Public Accounting Firm), pages 66-68.

Auditors Report:

2. What is the date of the auditors report?
3. Why is that date not the same date as the companys fiscal year-end?
4. What type of audit opinion was issued by the auditor for the financial statements?
5. Does the independent registered public accounting firm believe that the companys internal controls function effectively? What phrase led you to your answer?
6. As stated in the auditors report, who is responsible for the financial statements and for maintaining effective internal controls?

General Financial Statement Information:

8. How are the amounts on the financial statements reported at face value, in thousands, or millions?
9. Does Macys refer to the latest completed fiscal year as Fiscal 2021 or Fiscal 2020?
10. In what order are the individual financial statements presented in this annual report? Note: Consider their Statement of Operations and the Statement of Comprehensive Income (Loss) together to represent their Income Statement.
11. In what order would the company have prepared the financial statements?

Income Statement (Consolidated Statements of Operations and Comprehensive Income):

Note: Please state dollar amounts in the same format as in the statements.

12. Does Macys present a single-step or multi-step income statement?
13. By how much did Net Sales increase or decrease from 2019 to 2020? State answer in dollars not percentages. Show calculations and state whether it is an increase or decrease.
14. By how much did Operating Income increase or decrease from 2019 to 2020. State answer in dollars not percentages. Show calculations and state whether it is an increase or decrease.
15. By how much did Net Income increase/decrease from 2018 to 2019 and 2019 to 2020? Use the amounts labeled only Net income (loss). State answers in dollars not percentages. Show calculations and state whether it is an increase or decrease for the respective years.
16. Based only on your view of the income statement, what appears to be the cause of the volatility in Net Income?
17. What is the largest expense on the income statement for the current year? Provide name of the account and amount.

Balance Sheet (Consolidated Balance Sheets):

18. How much cash and cash equivalents did the company have at the end of the current year?
19. By how much did cash increase or decrease from the prior year?
20. Compute the working capital at the current year-end. Provide the calculation.
21. Compute the current ratio at the current year-end. Round to two decimal places and provide the calculation.
22. Will the company be able to pay its current liabilities? Explain.
23. Compute the companys inventory turnover for Fiscal 2020. Provide the calculation and round to two decimal places. Note: Cost of sales=Cost of good sold.
24. Compute the debt-to-equity ratio at the end of Fiscal 2020. Provide the calculation and round to two decimal places. Note: You will have to calculate total liabilities.

Statement of Cash Flows (Consolidated Statement of Cash Flows):

25. Which activity (operating, investing, or financing) provided the most cash flow in 2020? What was the amount?
26. Which activity (operating, investing, or financing) used the most cash flow in 2020? What was the amount?

Note 1 (Organization and summary of Significant Accounting Policies):

27. What inventory valuation method does the company use (full description)? Note: This will not be exactly like the methods we learned in class.
28. What depreciation method is used for its Property and Equipment?
29. When does the company recognize revenue from sales of their goods and services?

Conclusion:

30. Based only on the information from this financial statement project, what is your opinion of the financial strength of the company? Why?