Barnes & Noble, Inc.

Christine CorcilliACG2021 SECTION 080

Executive Summary

This is a solid company. In the last year it has reduced it’s debt and

increased it’s cash flow. Therefore, sales and profits are financing the

company versus outside sources such as investors and creditors.

http://www.barnesandnobleinc.com/pdfs/bnannual2002.pdf

• Stephen Riggio is the Chief Executive Officer and Vice Chairman • Location of home office

122 Fifth AvenueNew York, New York 10011

• Ending date of latest fiscal year February 1, 2003.• Barnes & Nobles, Inc. main business is operation of Barnes

and Nobles Bookstores. They also hold a 63% interest in Gamestop and a 38% interest in Barnes and Nobles.com.– Barnes and Nobles, Inc. bookstores sell books, music, entertainment

software, and DVDs. The company also operates B. Dalton Bookseller, Doubleday Book Shop and Scribber’s Bookstore.

– Gamestop is a retail store which sell video games and video game equipment. Gamestop operates Babbage’s, Software Etc., FuncoLand, and Gamestop.com all are the same type of retail businesses. They also operate the magazine Game Informer.

– Barnes and Nobles.com sells book, music, DVDs. They also sell out of date books.

• Barnes and Nobles, Inc. operate in 49 states and the District of Columbia as Barnes and Nobles Bookstores.

• Company’s independent auditors are BDO Seidman, LLP.

• The auditors said that the Barnes and Nobles, Inc. is reporting within the generally accepted principles in the United States.

Stock Market Information

• Company’s stock is $34.61 per share as of February 20, 2004

• Twelve month trading range, in 2003, of the company’s stock is $16.77 - $34.43 per share from the 2002 annual report.

• No dividends have been paid by the company ever as per the 2002 annual report.

• The stock should be held. I believe that the stock price will rise.

Part B. Industry Situation and Company Plans

The company outlook is good. They opened 210 new stores in what they call a bad year. Their numbers indicate that they are doing well financially. This is a solid company

that will continue to grow until is saturates the market.

Part C. Income Statement•Is the format most like a single-step or multistep format? Single step

•The gross profit, income from operations, and the net income all are growing up as the company grows and becomes more profitable.

2002 2001

Gross Profit 1,413,493 1,310,352

Income from operations

264,112 245,787

Net Income 99,948 63,967

Part C. Statement of Cash Flows

•Cash flow for 2002 was greater than net income but was less than net income in 2001.•The company has not changes its assets significantly. The biggest difference in the cash flow is assets from acquisitions .•The company’s primary source of financing for 2002 is loans. It purchase treasury stock and did not issue stock in 2002.•The cash has increased over the last two years.

Part D. Accounting Policies

•The company has adapted new ways of depreciating assets and handling goodwill. It depreciates assets based on change in use and change or residual value.

Part E. Financial AnalysisLiquidity Ratios

• Working Capital 2002 - $655,4202001 - $450,766

• Current Ratio 2002 -1.532001 - 1.4

• Receivable turnover 2002 - 89 Times2001 - 95 Times

• Average days’ sales uncollected 2002- 4.1 Days2001 - 3.8 Days

• Inventory turnover 2002 - 2.87 Times2001 - 2.77

Times• Average days’ inventory on hand 2002 - 127.2 Days

2001 - 131.8 Days

Part E. Financial AnalysisProfitability Ratios

• Profit margin 2002 – 1.8%

2001 – 1.3%

• Asset turnover 2002 – 3.03 Times

2001 – 3.06 Times

• Return on assets 2002 – 5.7%

2001 – 4%

• Return on equity 2002 – 10.4%

2001 – 7.2%

• Debt to equity 2002 - 1.72 Times

2001 – 1.95 Times

Part E. Financial AnalysisMarket Strength Ratios

• Price/earnings per share– 2002 – 24.89 Times– 2001 – 36.82 Times

• Dividend yield – Does not pay a dividend