There were major changes in categories related to the balance sheet, income statement, and the cash flow statement.

 There were major changes in categories related to the balance sheet, income statement, and the cash flow statement.

Rebecca Cline

The company that I have chosen to analyze is Signet Jeweler.  There were major changes in categories related to the balance sheet, income statement, and the cash flow statement. On the balance sheet the account with the major change was accounts receivable with a change of 64%. On the income statement, the account with a major change was operating income with a change of 121%. On the cash flow statement, the account with the major change was the net cash financing activities with a change of -61% (FY 2020 Annual Report, 2020).Disc 1 (2)-1.pngThe major change in account receivable from 2019 to 2020 in part had to do with Signet Jeweler’s financial reports for 2019 include “$160.4 million from the valuation losses related to the sale of eligible non-prime in-house accounts receivable” (FY 2020 Annual Report, 2020, pg. 37). Although Signet Jewelry had a significant increase between FY19 and FY20 for accounts receivable the low number in FY19 was due to the sale of accounts receivable and not necessarily an accurate representation of the company’s actual financial health. Although there is an increase in accounts receivable in FY20, Signet Jewelry was still able to keep their accounts receivable turnover ratio to 57.3 with a conversion into 6.37 days. This reflects positively on the company and also the company’s financial outlook.

The major change in operating income in Signet Jewelry has to do with the significant decrees in Goodwill recorded on the 2020 financial statements in comparison to the 2019 financial statement. In 2019, Signet Jewelry recorded -735.4 in good will while in 2020, they only recorded -47.7. The 2019 goodwill amount was recorded based on the Zale Corporation, Ultra Stores, as well as R2Net acquisition. The 2020 FY goodwill pertains to the same transitions due “to an error in the calculation of goodwill impairments during Fiscal 2019” (FY 2020 Annual Report, 2020, pg. 97). The major change in Signet Jewelry’s goodwill is due to the lack of accusations in FY20. Although FY20 financials look better because the amount of goodwill decreased significantly, it is due to a lack of growth. The changes lead me to believe that Signet Jewelry is in a good place with the portfolio that is currently has and is waiting to see what happens with the industry before expanding. The changes in goodwill reflect positively on the company and outlook for the company.Net cash financing activities had a major change from 2019 to 2020 as well. The majority of the difference was due to the FY19 financials having $485.0 million for the repurchase of common shares. “Net debt was $237.0 million as of February 1, 2020 compared to net debt of $533.0 million as of February 2, 2019” (FY 2020 Annual Report, 2020, pg. 55). The change in net cash financing activities shows that the company values reducing the amount of debt that they are holding in an attempt to bring the company to a better financial situation. This reflects positively on the company and shows that the company has a good outlook.

Resources:

FY 2020 Annual Report. Signet Jewelers. (2020, May 1). https://s26.q4cdn.com/755441662/files/doc_financials/annual/Signet-2020-Annual-Report.pdf