Tiffany & Co.Ashley Dempsey

ACG2021.002

Executive SummaryAlthough Tiffany’s financial

goals were not meet for the year they still had a 10% increase in net sales. Gross margin declined from 2003 due to higher costs of precious metals and diamonds. Stock prices did decline also. Net earnings however did increase 41%.

• http://www.shareholder.com/tiffany/

Introduction• Chief Execute

Officer:

Michael J. Kowalski• 727 Fifth Avenue

New York, NY 10022212-755-8000

• Fiscal year ends on January 31, 2005

-Jeweler and specialty retailer

-151 Retail stores in 17 countries worldwide

Audit Report

• PricewaterhouseCoopers LLP. New York, New York

• The consolidated financial statements have been audited in accordance with standards generally accepted in the USA. Management had an effective plan for internal control.

Stock Market Information• $36.79 Most recent price of

company’s stock• 12 month trading range:

$43.80-28.60• Dividends/share $.23• Friday March 3, 2006• Hold stock if financially

stable. It’s at the high end of its stock price but its not at it’s potential high. You could sell depending on what price you bought the stock for.

Industry Situation and Company Plans

• Developing a new business LITTLE SWITZERLAND and IRIDESSE. They focus exclusively on pearl jewelry. http://www.shareholder.com/tiffany/news/20021002-91416.cfm

• Throughout Tiffany retail stores they have released new designed jewelry. The ATLAS collection was the most successful introduction over the past year. The Tiffany & Co. foundation had its fifth anniversary receiving $25 million dollars towards the charitable work of the organization.

Part C. Income Statement

2004 2003

Gross Margin $1,230,573 $1,157,382

Operating Income $294,529 $355,519

Net Income $304,299 $215,517

•The format is most like single-step.

•A $74,000 increase in gross margin and $60,000 decline in Operating income. Overall the Net Income rose an amazing $89,000 over the year.

Part C. Balance SheetYear Assets = Liabilities + Stockholder

’s Equity

2005 $2,666,118

$399,821 $1,701,160

2004 $2,391,088

$395,159 $1,468,200

Over the year Assets, Liabilities and Stockholder’s Equity accounts all took an increase. The Asset account having the greatest change and increase of $275,000 and Stockholder’s Equity around $232,000. Liabilities account with the smallest increase of only $4,000.

Part C. Statement of Cash Flows

• The cash flows from operations were more from 2002-2003 but declined a sizeable amount from 2003-2004 of $150,000.

• The company is growing through other ventures in new businesses. The release of a new stock repurchase program.

• The company’s primary source of financing is through stock sales. The Bank Of New York is their major financer. The CEO also sits on the board of The Bank of New York which makes for a convenient business relationship.

• Cash increased from 2002 from 156,197 to 248,665. From 2003-2004 cash decreased from 248,665 to 187,681.

Part D. Accounting Policies• Revenue recognition: sales are

recognized at the “point of sale”. Shipping included in net sales to customer and has a reserve for possible returns. Most revenue was dominated by the US dollar.

• Cash: Distributed properly throughout banks.

• Short-term investments: invested in auction rate securities. Re-classified and doesn’t affect other financial statements.

• Inventories: LIFO method used• Property: In 2000 started a multi-year

project to improve the New York store to increase sales 25%. Depreciation is calculated for: 39 years for buildings, 5-15 years for machinery, 3-10 years for office equipment.

• There are detailed notes to each aspect of the financial statement. From cash, net earnings, debt, investments, etc.

Financial Statement

Part E. Financial Analysis: Liquidity Ratios

2005 2004• Working Capital $1,208,068

$952,923• Current ratio 4.02

3.41• Receivable turnover 16.6 times

16.34 times• Avg. days sales uncollected 21.9 days

22.3 days• Inventory turnover 1 times

1.05• Avg days inventory on hand 365 days

347.6 days

Part E. Financial Analysis: Profitability Ratios2004 2003

• Profit Margin 14%11%

• Asset Turnover .87times.93times

• Return on Assets 12%10%

• Return on Equity 19%16%

Part E. Financial Analysis: Solvency Ratio

• Total debt to equity

2004200325.9%33.2%

Part E Financial Analysis: Market Strength Ratios

20052004

• Price/Earnings per share 24.5352.85

• Dividend Yield .6% .6%