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1
Financial Statement Analysis
Overstock.com
War
2
Overstock.com
Overview of Business
What do they do?
www.overstock.com
Performance?
http://finance.yahoo.com/q/bc?s=OSTK&t=5y&l=on&z=l&q=l&c=
3
Overstock.com:
Overview of Business
Key success factors?
Key risks factors?
4
1. Revenue Recognition
2. Reserve for Returns
3. Allowance for Doubtful Accounts
4. Allowance for Obsolete and Damaged
Inventory
5. Accounting for Income Taxes
6. Valuation of Long-Lived and Intangible
Assets and Goodwill
5
238.9/91.8 - 1 = 160%
What is the gross merchandise sales growth
rate?
294.8/154.5 - 1 = 91%
Income Statement - Annual
Overstock.com Inc.
Restated as of: 12/31/03 12/31/02 12/31/03 12/31/02
Source Document: 10-K 10-K 10-K 10-K
Direct Revenue 136.6 77.9 136.6 77.9
Gross
As Reported
GAAP vs. Gross Basis Sales
(see reconciliation on page 4 of 10K)
7Source: Nissim and Penman (2001)
Mean reversion in sales
growth rate
8
What is the GAAP based growth rate in gross
profit?
25.3/18.3 = 39%
What is the gross basis growth rate in gross
profit?
25.3/18.3 = 39%
GAAP Basis vs. Gross Basis
Gross Profit
Income Statement - Annual
Overstock.com Inc.
Restated as of: 12/31/03 12/31/02 12/31/03 12/31/02
Source Document: 10-K 10-K 10-K 10-K
Direct Revenue 136.6 77.9 136.6 77.9
Comm./Partner 100.8 12.4 140.7 63.4
Warehouse 1.5 1.5 1.5 1.5
Sales Returns and Discounts 16.0 11.7
Gross Revenue 294.8 154.5
Gross
As Reported
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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
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