Instructions I have a project for my accounting class where we are making a thorough financial analysis on Burlington Coat Company. My part is to make a discount cash flow model and residual income model both pessimistic and optimistic. I have included a sample of a past project; my professor offered us it as reference. I have included a sample of how the models should look. I need to have those same 6 charts. but the sample is of another company Company website link - https://www.burlingtoninvestors.com/financial- information/annual-reports/n Financial Reporting Analysis and Business Valuation Project Phase 2: Financial Analysis Group 2 Andres Castellanos Alyssa Cerber Edrine Gaudin Roy Koster Jr Carlos Pelayo ☐ Burlington LADIES • MENS ⚫ KIDS • HOME • COATS • 009 OD 00 1 The dividends of Burlington Stores Inc are not provided by the company or other internet sources; hence, the sustainable growth ratios cannot be completed without the quantity of the dividends. Introduction: The Company was established more than 50 years ago under the name Burlington Coat manufacturing, specializing in the sale of discounted coats from a manufacturing facility. Presently, the company is known as Burlington locations, a widely acknowledged off-price retailer with over 1,000 locations spread across the whole nation. They provide a diverse range of affordable branded clothing and accessories for women, men, and children, as well as home decor goods and other products. Burlington is the third most prominent off-price store, ranking after TJX Companies and Ross Stores. Overall Profitability When analyzing Burlington's profitability, it is imperative to focus on overall profitability and income statement ratios. Through this analysis, we were able to determine the ROA and ROE deriving from the traditional DuPoint Disaggregation and an alternative method with an Operating Focus to ROE analysis. First, through the traditional method, Burlington's ROA increased 1.33% YoY from 2023 to 2024 which suggests that the company is becoming more effective at generating profits from assets, revenue growth, and cost reductions. However, when compared to Ross, Burlington accounted for one third of ROA. Net profit Margin also reflects an increase YoY going from 2.64% in 2023 to 3.49% in 2024 indicating better control over expenses and/or an increase in revenue without a proportional increase in expenses. In comparison, Ross had a higher percentage in Net Profit Margin for 2024 with suggests a more effective control over costs, service, and providing goods. Burlington's ROE increased from 29.59% 2023 to 37.91% in 2024 which generally indicates an improvement in the company's profitability and efficiency in generating returns for its shareholders. This also indicates that the company was able to utilize shareholders' equity more effectively in year 2. Ross, 1 The dividends of Burlington Stores Inc are not provided by the company or other internet sources; hence, the sustainable growth ratios cannot be completed without the quantity of the dividends. however, had a higher ROE for 2024, suggesting they had superior financial performance and better profitability than Burlington. Burlington Ross Consolidated Statements of Operations USD ($) shares in Millions, $ in Millions 12 months ended 12 months ended 12 Months Ended Overall Profitability: ROE Decomposition Traditional Net Profit Margin X Asset Turnover ROA x Financial Leverage February 3,2024 January 28, 2023 February 3,2024 3.49% 1.3 2.64% 9.2% 1.21 1.47 4.54% 3.21% 13.53% 8.36 9.23 3.03 37.91% 29.59% 40.93% Return on Equity (ROE) ROE Decomposition Alternative Net Operating Profit Margin 6.40% 5.46% 8.6% X Net Operating Asset Turnover 2.02 2.09 3.36 Operating ROA 12.92% 11.41% 29% Spread 35.2% 31.34% 4.01% x Net Financial Leverage 0.71 0.58 3 Financial Leverage Gain 24.99% 18.2% 12% Return on Equity (ROE) 37.91% 29.59% 40.93% *Industry Ratios not available Evaluation of Operating Management When analyzing the profitability ratios, Burlington has shown a small YoY incline as it relates to gross profit margins, going from 40.59% in 2023 to 42.6% in 2024, indicating efficient cost management and pricing strategies. Similarly, Burlington's net profit Margin has also seen an increase by .86% in the last year which indicates a better control over operating expense relative to revenue. Both Burlington and Ross have shown positive NOPAT margins indicating that they are generating profits from their core operations after accounting taxes. Burlington's NOPAT margin has steadily increased from 5.46% in 2023 to 6.40% in 2024, reflecting improved operational efficiency. In comparison, Ross has also demonstrated a positive trend. 1 The dividends of Burlington Stores Inc are not provided by the company or other internet sources; hence, the sustainable growth ratios cannot be completed without the quantity of the dividends. As it relates to EBITDA Margin, Burlington's ratio has fluctuated over the years but remained stable overall. In 2024, it stands at 9.18%, suggesting potentially healthy earnings before interest, taxes, depreciation, and amortization relative to revenue. Consolidated Statements of Operations - USD ($) Shares in Millions $ in Millions Income Statement Ratios (Profitability Ratios) Gross Profit Margin Net Profit Margin NOPAT Margin EBITDA Margin Effective Tax Rate *Industry Ratios not available Operation Management Burlington Ross 12 months ended 12 Months ended February 3,2024 January 28, 2023 January 28, 2022 January 28, 20204 42.6% 40.58% 3.50% 2.64% 6.40% 5.46% 41.68% 4.4% 6% 9.18% 7.61% 10.98% 27.1% 25.3% 26% 1 The dividends of Burlington Stores Inc are not provided by the company or other internet sources; hence, the sustainable growth ratios cannot be completed without the quantity of the dividends. 27.36% 9.2% 8.6% 13.38% 23.9% Evaluating Productivity Table 4: Working Capital Management Burlington Stores, Inc. Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions Ross Stores, Apparel Inc. Retail 12 Months Ended 12 Months Ended 2023 Feb. 3 2024 Jan. 28, 2023 Feb. 3, 2024 Working capital management and turnover ratio Operating capital to sales ratio 3.07% 4.28% 15.76% N/A Operating working capital turnover 32.55 23.36 6.34 2.45 Account receivable turnover 2.80 2.99 2.34 7.39 Inventory turnover 5.13 4.38 6.75 6.62 Account payable turnover 10.15 9.09 10.42 N/A Days' receivable 130.56 122.16 155.83 53.57 Days' inventory 71.15 83.33 54.07 54.89 Days' payable 35.96 40.15 35.03 N/A Operating cycle 201.71 205.49 209.90 108.46 Cash cycle 165.75 165.34 174.87 ➡ Most of the ratios are not correct??? When dissecting the working capital and turnover ratios for Burlington Stores, Inc we gain insight into what makes them successful and how they fair against one of their biggest competitors as well as the industry average. To start the A/R turnover ratio decreased from 2023 to 2024 but remains higher than Ross which indicates that Burlington does a better job collecting its payments. Both Inventory Turnover and A/P turnover ratios both increased showing Burlington's sale to be on the rise and their ability to pay short-term debt to be more favorable. Unfortunately, for them their major competitor, Ross is doing a 1 The dividends of Burlington Stores Inc are not provided by the company or other internet sources; hence, the sustainable growth ratios cannot be completed without the quantity of the dividends.

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