Comparing of Financial Statement for Similar Companies

Topics: Balance sheet, Generally Accepted Accounting Principles, Asset Pages: 77 (5011 words) Published: March 30, 2013
Freds, Belk, Big Lots and Dollar Tree are all famous variety store in United State. All of them provide various and qualified goods to customers. This analysis report, discussing different financial data based on the 10-K document of the four companies, wants to give readers a meaningful describe to these companies so investors can have clear opinions to help decide.

Company Profiles
Freds, Inc. (Freds) is to meet the general merchandise and pharmacy needs of the small - to medium- sized towns it serves by offering a wider variety of quality merchandise and a more attractive price-to-value relationship than either drug stores or smaller variety/dollar stores and a shopper-friendly format which is more convenient than larger sized dis count merchandise stores. The company’s sales of p harmaceuticals have a percentage of 33.5% in 2010, 34.1% in 2011, and 34.9% in 2012, comparing to the total sales. And its major sales of others include households good and food products, etc., showing that the company tries its best to execute its business strategy.

Big Lots, Inc. is a Fortune 500 retail corporation. The company is based in Columbus, Ohio, USA and currently operates over 1,400 stores in 47 states. Its department stores focus mainly on selling closeout and overstock merchandise. There are some items in the stores, such as foodstuffs, that are replenished on a continual basis. What’s more, Big Lots also operates a wholesale division, which provides merchandise in bulk for resale from a variety of categories. Big Lots uses an existing building, such as a grocery or department store that had either moved or ceased operations.

Dollar Tree, Inc. began its operations in 1953 and was incorporated in Virginia. The company is an American chain of discount variety stores that se lls every item for $1.00 or less. The company targets low to lower-middle income consumers and sells everyday products from food and personal care products to non-essentials. It sells its product in three business segments:1) Consumable merchandise, which accounted for 48.1% of its sales in 2011, 2) Variety merchandise, which accounted for 46.9% of 2011 sales, and 3)seasonal goods, explained 5% of 2011 sales.

Belk, Inc., together with its subsidiaries, is the largest privately owned mainline department store business in the United States, with 303 stores in 16 states, as of the fiscal year ended January 28, 2012. Generated revenues of $3.7 billion for the fiscal year 2012, and together with its

predecessors, have been successfully operating department stores since 1888. Belk Stores Services, Inc., a subsidiary of Belk, Inc. provides a wide range of services t o the Belk division offices and stores, such as merchandising, merchandise planning and allocation, advertising and sales promotion, information systems, human resources, public relations, accounting, real estate and store planning, credit, legal, tax, distribution and purchasing.

Accounting Policies (see Exhibit 1)
All of the four companies are United State location so that part of their accounting policies are the same, but because the area location and business strategy, they have some different accounting policies.

The four companies do not amortized goodwill and tested them for impairment annually, using an income approach and a market approach in determining fair value for purposes of goodwill

impairment tests. All four of them report income taxes in accordance with FASB ASC 740, the asset and liability method is used for computing future income tax consequences of events . The major differences exist in revenue recognition, merchandise inventories and Stock-based compensation. Based on their requirements, Freds records its sales when the merchandise is shipped from the Company’s warehouse; Dollar tree records sales revenue at the time a sale is made to its customer ; Big Lots’ sales Revenue is recognized when the customer makes the final payment and takes possession...
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