Research and find the most recent 10K filing for 2 (two) publicly-traded merchandising companies of your choice but make sure they are in the same industry. You can search for 10-K annual reports using SEC.gov or by going to the website of the company and searching for investor relations materials. Make sure you use the latest annual report for the companies which you choose. Please do not use Amazon as the company of your choice.
Please pick two companies in the same general industry. For example Nike and UnderArmour; or WalMart and Target; or Home Depot and Lowes.
Upon completion of your research, draft your initial response by answer the following questions:
Give an overview of the company selected and describe the types of products that are sold by the company you researched?
What inventory accounting methods are used by the company you researched? (hint: review the notes to the financial statements within the 10K filing)
For your selected company –
Compute the gross margin and gross margin ratio for the 3 (three) years you found in the latest annual report and show the bases of your calculation as part of your initial response. Note you can find these amounts on which of the basic financial statements?
Comment on your results for gross margin and especially the gross margin ratio for each individual company. (For example: what are the trends both in total gross margin and in the gross margin ratio? Decreasing, increasing, or both? Why in your opinion-you can research additional information on this topic in the 10K, Management’s Discussion and Analysis, to answer what are the latest trends)
How do your two chosen companies compare to each other for the gross margin ratio? Are there any specific reasons the gross margin ratio differs including the trends over the three years for one company compared to the other company?