Sales Growth
⚫Growth rate in GAAP basis sales = 238.9/91.8
= 160%
GAAP Basis vs. Gross Basis Gross
Profit
Income Statement – Annual
Overstock.com Inc. As Reported Gross
OSTK 69037010 NASDAQ Natl Market
Internet Retail
12/31/03 12/31/02 12/31/03 12/31/02
Restated as of:
Source Document: 10–K 10–K 10–K 10–K
Direct Revenue 136.6 77.9 136.6 77.9
Less: sales, returns and discounts (16.0) (11.7)
Total Revenue 238.9 91.8 278.8 142.8
Cost of Sales
213.5 73.4 253.4 124.4
Gross Profit
25.5 18.3 25.5 18.3
Gross Profit Growth
⚫Growth rate in GAAP basis gross profit
= 25.3/18.3 = 39%
GAAP Basis vs. Gross Basis
Common Size Income Statements
Income Statement – Annual COMMON SIZE
Overstock.com Inc. As Reported Gross
OSTK 69037010 NASDAQ Natl Market
Internet Retail
12/31/03 12/31/02 12/31/03 12/31/02
Cost of Sales
89.3% 80.0% 90.9% 87.2%
Gross Profit
10.7% 20.0% 9.1% 12.8%
Sales/Marketing 8.4% 9.4% 7.2% 6.1%
General/Admin. 7.1% 11.8% 6.1% 7.6%
Goodw ill Amort. 0.0% 0.0% 0.0% 0.0%
Accounting Performance vs.
Economic Performance
⚫Overstock.com is ‘investing’ significant
amounts to fuel sales growth, customer loyalty
and brand awareness. Most of these amounts
must be immediately expensed for accounting
purposes:
distortions to sales growth rates and profit margins.
Make sure you are aware of such distortions before
interpreting the information in the financial statements
⚫GAAP requires the immediate expensing of many
expenditures that are potentially investments that could
Overstock.com:
Ratio Analysis
Trade-Off 1:
Internet versus Bricks and Mortar
0%
5%
10%
15%
20%
25%
30%
35%
0 1 2 3 4 5 6 7 8 9 10 11
Profit Margin
ROE=10%
ROE=20%
Bricks and Mortar
Internet
Trade-Off 2:
Liquidation versus Regular Retail
0%
5%
10%
15%
20%
25%
30%
35%
0 1 2 3 4 5 6 7 8 9 10 11
Turnover
Profit Margin
ROE=10%
ROE=20%
Liquidation