Reference no: EM132472491

Locate an actual Income Statement from the latest fiscal year for one of the following companies:

1. Sears
2. Tesla

Pick an Income Statement Line Item or Ratio from the list below:

• Line Item

Ratio

1. Revenue (aka Sales, Turnover)
2. Cost of Goods Sold/Cost of Sales
3. Salary Expense
4. Selling, General and Administrative Expense
5. Gross Profit
6. Operating Profit
7. Net Profit
8. Gross Margin (%)
9. Net Margin (%)
10. Salary Expense as % of Sales
11. Return on Sales
12. Return on Equity
13. Return on Assets
14. Earnings Per Share (EPS)
15. EBITDA

Question 1: Interpret what does this line item or ratio measure and why is it important item for Management to understand this number?

Question 2: Identify the past 4 years of amounts for your line item or ratio (Note: this will require you to track down additional historical Income Statements to get the older data).

Answer the following questions:

Question 3: What is the trend for this line item or ratio?

Question 4: Has the line item or ratio amount increased or decreased?

Question 5: Is this a "good" thing or a "bad" thing? For this company?

Question 6: What might management do to improve this line item or ratio?