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Comparison Of Office Depot And Staples

680 Words3 Pages

This paper will cover the liquidity, profitability, and solvency of two major office supply stores, Office Depot and Staples. It will also discuss whether or not it is wise to invest in Staples. Liquidity measures a company’s short run performance. Inventory Turnover Ratio determines how often inventory is purchased and sold during the year. Office Depot saw an Inventory Turnover Ratio of 6.58 with an average of 55.47 days for inventory to be sold. Staples was similar with an Inventory Turnover Ratio of 7.36 and an average of 49.59 days for inventory to be sold. The average Inventory Turnover Ratio for the office supply industry in 2015 was 9.73 (Office). The Current Ratio measures liquidity by calculating how many current assets you have …show more content…

The Net Profit Margin Ratio denotes the percentage of revenue that is shown in net income after subtracting expenses. Staples saw an increase of 1.2 in this ratio from 2014 to 2015. Office Depot had a ratio of -2.19 in 2014 which increased to a small, positive ratio of 0.06 in 2015. The Gross Profit Percentage ratio demonstrates how much profit was made through each dollar of sales after you subtract the cost of goods sold. Staples had a ratio of 25.79 in 2014 which increased to 26.18 in 2015. Office Depot also enjoyed a slight increase from 23.46 in 2014 up to 24.18 in 2015. As we can see from 2014 to 2015 fiscal years, both companies experienced increases in profitability, even if those these increases were minimal in some …show more content…

Net income is slightly more favorable. For the 2013 fiscal year, Staples had a net income of 620 million but fell drastically in the 2014 fiscal year to 135 million leaving a negative net income percentage of -78.23% in 2014. Net income increased back up to 379 million in 2015, giving us an increase in net income percentage of 180.74. Total assets have decreased at a stable rate over the past three fiscal years, from 11,175 million in 2013 to 10,172 million in 2015. These numbers should cause concern for stockholders. “Office supply businesses like Staples and Office Depot have lost their sheen as e-commerce sites such as Amazon have grown,” explains The Street, a financial news and services website

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