Operations Group Assignment 1

Angela Rice, Justin Stuva, Genelle Iocca, Whitney Duckels

Group Assignment 1: Motion Chart

We chose to examine the revenue, net income, and EBITD of companies
within the retail distribution industry to determine how well
operating costs were managed for the past 10 years. The companies we
chose were Wal-Mart, Target, Sears, and Cost Plus Inc. In order to
obtain the information needed to create the animation, we researched
the income statements for each of the companies on Yahoo finance and
MSN Money.

After observing the animation, we concluded that Wal-Mart increased
its revenue the most of all the companies, by $236.9 billion or a growth
rate of 172% over ten years, while maintaining relatively
proportional operating costs resulting in an increased net income by
a rate of 191%. This can be observed by the consistent diagonal
movement from the lower left corner to the upper right corner of the
chart. Target also seemed to maintain a proportional revenue to
operating cost relationship, but only increased its revenue by $32.7
billion, or a growth rate of 106%. Overall, net income for Target
grew by 196%.

Next,when examining Sears, we noticed that in the first few years Sears
had a relatively steady revenue. However, during this time Sears was
unable to manage its operating costs efficiently, which can be seen
by the dramatic decrease in EBITD, resulting in negative EBITD and
net income values. We feel this can be attributed to K-Mart’s
Chapter 11 bankruptcy filed in January of 2002. The company was able
to turn around the EBITD and net income for an overall positive
result in the ten years we studied. Overall, Sears’ revenues
changed by $1.7 billion or a growth rate of 51%; and net income grew
by 45%.

Finally, we observed Cost Plus, Inc. and noticed that it hardly moved at all
because its financial figures were so small in comparison to the
other companies. During the ten-year analysis, revenues for Cost Plus
increased by $708.9 million, or a growth rate of 225% while net
income decreased at a rate of 168%. We believe the decrease in net
income compared to the increase in revenue is a result of poor
management of operating costs.