Accounting Final Paper

Topics: Balance sheet, Generally Accepted Accounting Principles, Revenue Pages: 5 (1471 words) Published: March 18, 2013
Men’s Wearhouse Analysis

Principles Of Accounting ACC 205

December 2, 2012

Company Overview
George Zimmer (whom I have met on a few occasions) opened his first store in Huston in 1973. He was two years out of college and became upset when Foley’s dropped his clothing line that he was selling at the time. So, as they say the rest is history. The Men’s Wearhouse is one of the largest specialty retail stores in the world. With 1192 different store locations through out the United States and Canada. The Men’s Wearhouse provides middle and upper middle-income men quality merchandise, above average customer service, on-site tailors, and designer brands all at discounted prices. Most of their stores are located in nicer regional strip centers. The Men’s Wearhouse is also the larges provider of tuxedo rentals and products in the United States and Canada, which it rolled out to several markets in 2000 through 2002. This has allowed the company some contact with a younger segment of the population and thus increasing its demographic base.

The main products and services provided by the company include, discounted tailored suits, tuxedo sales and rental, coats, slacks, ties, sportswear, outerwear, and shoes. The tailored suit sales are what drive the business and everything else falls around the sale of the suit. The Men’s Wearhouse main competition is, Jos. A. Banks, Brooks Brothers, and Burlington Coat Factory. According to the Men’s Wearhouse (2011) they see completion as “specialty men’s clothing stores, traditional department stores, off-price retailers, and independently owned tuxedo rental stores”. Furthermore, they believe that the main competitive factors in the menswear market are merchandise assortment, quality, price, garment fit, merchandise presentation, store location, and customer service. Horizontal Analysis of Income Statement and Balance Sheet

Income Statement Men’s Wearhouse
(In millions)
Net Sales2,382.682,102.661,909.58437.123%
Total Revenue2,382.682,102.661,909.58437.123%
Cost of Revenue1,333.761,204.231,110.68223.0820%
Gross Profit1,048.93898.43789.90259.0333%
Total Operating 2,197.252,000.991,840.20357.0519%
Operating Income185.43101.6769.38116.05167%
Net Income120.6067.7046.2274.38161%
Normalized Income190.25115.8888.25102115%
Before Taxes
Normalized Income124.2878.0159.2565.03110%
After Taxes
Retail Sales2,139.191,976.371,909.58229.6112%

Balance Sheet Horizontal Analysis
(In Millions)01/28/1201/29/1101/30/10AmountPercent
Cash & Equivalent125.31136.37186.02(60.71)(33%)
Accounts Receivable57.4661.5217.1340.33235%
Total Current Assets825.38764.01710.38115.0016%
Total Assets1,405.951,320.321,234.15171.8014%
Total Current 281.28266.66224.0457.2425%
Total Liabilities386.79349.37329.7657.0317%
Total Equity1,019.16970.95904.39114.7713%
Total Liabilities &1,405.951,320.321,1234.15171.8014%
Shareholders equity
Number of Stores1,166.001,192.001,259.00(93)(.07%)

The horizontal analysis is used to “show the change in certain accounts from two separate accounting periods” (Ashford University, 2012). This will help investors to look at trends in the company. With a horizontal analysis it is easier to see the trends when you break down the trends between the years. The positives trends I see with the Men’s Wearhouse are accounts receivable 235%, net sales 23%, total revenue 23%, and gross profits 33%. These are all positive trends for the company. The two that stick out for me are accounts receivable rising from 17.13 million in 2010 to 57.49 million in 2012, with a 235% increase and gross profits rising 33% in that same time frame.

The negative trend is the...
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