Look at the balance sheets and income statements for Toys R Us for the five years from 1993 to

Look at the balance sheets and income statements for Toys R Us for the five years from 1993 to

Look at the balance sheets and income statements for Toys R Us for the five years from 1993 to 1997 taken from its 10-K reports:

Toys R Us Balance Sheet (in millions)

	1997	1996		1995		1994		1993
Assets
Cash and marketable securities	$214	$761		$203		$370		$792
Receivables	175	142		129		116		99
Inventory	2,464	2,215		2,000		1,999		1,778
Other current assets	51	42		87		46		39
Net property and equipment	4,212	4,047		3,858		3,669		3,185
Intangibles	356	365		0		0		0
Other assets	491	451		460		371		257
Total assets	$7,963	$8,023		$6,737		$6,571		$6,150
Toys R Us Balance Sheet (in millions)
	1	997	1996		1995		1994	1993
Liabilities
Notes payable		$134	$303		$333		$123	$240
Accounts payable		1,280	1,347		1,182		1,339	1,156
Accrued expenses		680	720		438		473	472
Income taxes payable		231	171		140		202	207
Deferred taxes		219	223		229		220	203
Long-term debt		851	908		827		785	710
Other long-term liabilities		140	161		156		0	13
Total liabilities	$	3,535	$3,833		$3,305		$3,142	$3,001

Toys R Us Balance Sheet (in millions) (Cont.)

	1997	1996	1995	1994	1993
Common stock	$30	$30	$30	$30	$30
Capital surplus	467	489	543	521	454
Retained earnings	4,610	4,120	3,693	3,545	3,013
Equity adjustments	(122)	(60)	13	(25)	(56)
Treasury stock	557	388	846	642	293
Shareholders’ equity	$4,428	$4,190	$3,433	$3,429	$3,149
Total liabilities and shareholders equity	$7,963	$8,023	$6,738	$6,571	$6,150

_{Toys R Us Income Statements (in millions)}

	1997	1996	1995	1994	1993
Net sales	$11,038	$9,932	$9,427	$8,746	$7,946
Cost of goods sold	7,710	6,892	6,592	6,008	5,495
Gross profit	$3,328	$3,040	$2,835	$2,738	$2,451
Selling, general, and administrative expenses	2,484	2,226	2,087	1,826	1,630
Operating profit	$844	$814	$748	$912	$821
Nonoperating income (expense)	13	(42)	(379)	16	24
Interest expense	85	99	103	84	72
Income before taxes	$772	$673	$266	$844	$773
Provision for income taxes	282	246	118	312	290
Net income	$490	$427	$148	$532	$483

Note: The amounts shown in these statements may differ slightly from the reported amounts due to rounding.

a. Using financial ratios, describe the company’s operating perfor- mance and financial condition over this five-year period.

b. What other information do you need to complete your financial analysis of Toys R Us?

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