In financial reporting, the goal is to provide useful information to users of the such as investors. Investors often use numbers from the (and other sources) to calculate financial statement ratios. For instance, in the retail or merchandising industry, the gross profit ratio is a key ratio. It shows information about pricing, purchases, shrinkage, and many other things.
Investors compare the ratios with prior years for the same company and with industry comparators so they can see what has changed or what is different. This can be done by accessing the of public companies through websites such as SEDAR (the System for Electronic Document Analysis and Retrieval;
www.sedar.com). It is hosted by the Canadian Securities Administrators and was created in 1997, allowing public companies to electronically file all documents required under securities legislation in Canada.
SEDAR houses a searchable database. In the United States, a similar site is hosted by the U.S Securities and Exchange Commission (SEC). It is referred to as EDGAR—the Electronic Data Gathering, Analysis, and Retrieval system (www.sec.gov). Companies also include their on their own websites.
Instructions
a. Access SEDAR and search the database, looking for all merchandising companies. How many companies are in this merchandising industry? Make a note of the number in each subcategory. Why do you think the companies are subcategorized this way?
b. For the companies in the wholesale distributors subcategory, calculate the gross profit for each. Are these numbers comparable between companies? Why or why not?
c. If you wanted to compare gross profit margins for all companies in this or a similar category around the world, how might you approach this research?
d. For a fee, companies such as Bloomberg give access to large amounts of data and analysis. These companies are sometimes called data aggregators. What are the pros and cons of using a service such as this as opposed to doing your own research?
