A Comprehensive Financial Analysis

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A Comprehensive Financial Analysis
Of
TOYS R US

TABLE OF CONTENTS

Company Overview ....................................................... 4
Key Facts........................................................................ 4
Business Description.................................................... 5
History ............................................................................ 6
Key Employees .............................................................. 7
Major Products And Services..................................... 12
Products And Services Analysis................................ 13
SWOT Analysis ............................................................ 14
Top Competitors .......................................................... 18
Company View ............................................................. 19
Locations and Subsidiaries........................................ 24

HISTORY

Toys "R" Us was established in 1948 as a baby furniture store in Washington DC, by
Charles Lazarus at the young age of 25 . Mr. Lazarus began a business totally dedicated to kids and their needs just in time for the post-war baby boom era. The store started off by selling baby toys first, and then toys for older children, as it responded to customer demand. In 1957, Lazarus opened the first toy supermarket, which combined specialty retailing and off-price positioning. In May 1999, the company formed a new division, Toysrus.com. The following year, Toysrus.com teamed up with Amazon.com to form a co-branded online toy store.

ANALYSIS OF TOY R US’ MAJOR INDUSTRY

Toys "R" Us specializes in the provision of toys, apparel and baby needs to children and their families. The Toys "R" Us family, which includes Toys "R" Us, Babies "R" Us,
Imaginarium and Toysrus.com. It has operations in 25 countries, mainly the US,
Japan, Canada, and Europe, and sells toys, games, bicycles, sporting goods, VHS video tapes, electronic and video games, small pools, books, infant and juvenile furniture and similar items and electronics, as well as educational and entertainment computer software for children.

DESCRIPTION OF PRODUCT AND SERVICE LINE

Toys R Us, Inc is engaged in the operation of retail stores consisting of U.S. locations comprised of toy stores under the name Toys R Us, children's clothing store...

... middle of paper ...

...; 1.8233

Z-SCORE ABOVE 2.99--YOU'RE IN GOOD SHAPE
Z-SCORE BETWEEN 2.99 and 1.81--WARNING SIGNS
Z-SCORE BELOW 1.81--BIG TROUBLE--COULD BE HEADING TOWARD BANKRUPTCY

CONCLUSION AND RECOMMENDATIONS

The liquidity ratios show an increase in the current and acid-test (quick) ratios during the last three years. This coincides with an increasing/stockpiling of inventory and an increase in short-term debt which is detrimental to Toys R Us’ immediate debt paying ability. The Debt to Equity ratio is within the industry average which is welcome news to long-term creditor but unwelcome to common stockholders because they benefit from assets provided by creditors. The asset utilization ratios (Account receivable, Inventory turnover, Total asset turnover, etc) are all increasing which is a positive. However, the company’s turnover ratios are much slower than the industry average which indicates too many obsolete goods on hand and/or overstocked inventory. The Gross margin ratio is much lower than the industry average which indicates managements inability to control productions costs and a lower measure of profitability. The debt utilization ratios

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