Primary reason for both of companies having comparatively low net profit was high cost of good sold ?V it took out almost 70% of its net revenue of Sears; 80% of the net sales for Wal-Mart.
Except low profitability, for Sears, there was a significant increase in uncollectible account ?V Referring to exhibit 1, it kept increasing at a rate of 50% year after year... displayed 300 characters
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Sharpe increase from the uncollectible amount could been further explained by looking at the balance sheet of Sears ?V 50% of the total current asset was Net credit card receivable during year 1997. This might suggest that Sears need to revise their terms on repayment of the credit card bill or had to establish a more strict credit background check on their customer... displayed next 300 characters
Cost of sales was equivalent to 65% of total revenues.
Bad debts cost Sears approximately $1.5 billion. Provision for uncollectible accounts was 31% of credit revenues, and the delinquency rate went up to 7% from 5...
Moreover, it is vital to understand that 40 plus years of making right decisions for Wal-Mart to get in the position they are in today. In the past four years net income has risen by 25 percent, we can see by the table the closest competitor is Costco...
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