Analysis of Operating Activities: Cabela's

Cabela’s has three sources of revenue: merchandise sales, financial services revenue and other, which accounts for revenue that cannot be classified in the first two categories. The percentage of total revenue generated by these sources remained relatively unchanged year over year. Additionally the major expense accounts associated with generating revenue are cost of goods sold and selling, general and administrative expenses. The Company was able to reduce it COGS from 59.1% to 58.4% while maintaining its general and administrative expenses at 34%.

The Company’s net sales increased by 14.7%, while gross profit margin increased by 16.8% for the same period from 2005 to 2006. The accounts receivable turnover ratio change was negligible with a 48.3 versus 47.1 for the previous year. The company is growing its sales and profit margin at a steady pace without giving any ground to the amount of time required to collect on receivables.

Inventory increased 22% in 2006 and accounted for 28% of total assets; however, this was a decrease from 29% for 2005. The Company is improving their ability to manage inventory levels which can be substantiated not only by the decrease in percentage of total assets but also by the increase in inventory turnover from 2.63 to 2.72. The company will need to continue to focus on inventory management in order to improve turnover and return on assets.

Cabela’s has improved sales by 14.7% and translated that into 3.2% growth in net profit. The aggressive growth of the brick and mortar retail business has led to an increase in assets primarily in inventories and buildings which has led to degradation in all ratios relating to assets. The company has been able to use this leverage to improve profitability by delivering higher gross, operating and net profit margins and increasing return on equity from 11.34% to 11.69%.


Ratio Analysis

Income Statement Horizontal Analysis

Income Statement Vertical Analysis

Balanace Sheet Horizontal Analysis

Balance Sheet Vertical Analysis