Analyze the following income statment: Consolidated Statements of Earnings - USD
ID: 2791206 • Letter: A
Question
Analyze the following income statment:
Consolidated Statements of Earnings - USD ($) $ in Thousands 12 Months Ended Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014 Income Statement [Abstract] Net sales $ 16,208,122 $ 16,439,276 $ 21,105,141 Costs, expenses and other: Cost of products sold (Notes 2, 6 and 20) 14,182,215 15,325,386 19,255,904 Marketing, administrative and other expenses (Note 20) 596,761 458,989 520,805 Equity in earnings of unconsolidated affiliates (38,757) (5,329) (13,505) Impairments and losses on assets (Notes 7, 9 and 24) 244,833 25,393 Interest expense, net (Notes 7, 18 and 19) 169,244 173,531 169,256 Costs, expenses and other, total 14,909,463 16,197,410 19,957,853 Earnings before income taxes and noncontrolling interests 1,298,659 241,866 1,147,288 Provision for income taxes (Notes 2, 19 and 24) 398,243 48,836 368,724 Net earnings (Note 2) 900,416 193,030 778,564 Earnings attributable to noncontrolling interests (Notes 2 and 6) 104,145 112,306 99,227 Net earnings attributable to Nucor stockholders (Note 2) $ 796,271 $ 80,724 $ 679,337 Net earnings per share (Note 2 and 21): Basic $ 2.48 $ 0.25 $ 2.12 Diluted $ 2.48 $ 0.25 $ 2.11Explanation / Answer
In 2015, we find the net earnings to have dropped substantially by over 75% when compared to 2014. This is mainly due to recording of impariment and losses on assets to the tune of $ 244,000 in 2015. This was the reason for substantial drop in EPS both basic and diluted in 2015.In 2015, the firm has also registered lower sales ie the sales figures dipped by over 22% in 2015. Equity in earnings of affiliates has shown lesser losses in 2015 compared to 2014.
In 2016, the sales figures has shown a slight dip though it remains flat , however, Gross margin seems to have improved both over 2015 as well as 2014 . Gross margin in 2014 was around 9% but it improved to about 13% in 2016 signifying better control of costs. However, equity in earnings has shown more than 7 times dip in 2016 when compared to 2016. This raises doubt on whether the company has underreported the losses(for affiliates) in 2015.