Bed Bath and Beyond Essay

Words: 24491
Pages: 98

Valued at 1 April, 2007

Matthew Lewis: matthew.lewis@ttu.edu
Tyler Page: tyler.page@ttu.edu
Alex Segreti: alexander.l.segreti@ttu.edu
Andrea Spencer: andrea.spencer@ttu.edu
Stephen Wiggins: stephen.wiggins@ttu.edu

Table of Contents
Executive Summary
Business & Industry Analysis.
Five Forces Model
Rivalry Among Existing Firms
Threat of New Entrants
Threat of Substitute Products
Bargaining Power of Buyers
Bargaining Power of Suppliers
Competitive Advantage Analysis
Key Success Factors
Accounting Analysis
Key Accounting Policies
Accounting Flexibility
Accounting Strategy
Quality of Disclosure
Revenue Manipulation Diagnostics
Expense Manipulation Diagnostics
Potential “Red Flags”
Undo Accounting Distortions
Ratio
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Firms in this industry usually carry similar products at similar prices, making it easy for a consumer to switch back and forth between firms. Customers have a lot of bargaining power in the industry. This means that firms in the industry have to compete on price, resulting in smaller profit margins. Finally, suppliers for the industry have a relatively low bargaining power over firms. Firms and consumers both benefit from lower inventory costs, the result of an overabundance of suppliers.
Accounting Analysis
An accounting analysis is performed to evaluate a firm’s accounting practices in comparison to the realities of their current and prospective financial position. The 10-k released each year by Bed Bath & Beyond contains vital information identifying the firm’s key accounting policies. Bed Bath & Beyond

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must be efficient managing operating costs, maintaining sufficient inventory levels, and must possess strong expansion initiatives.
In keeping with generally accepted accounting principles (GAAP), Bed
Bath & Beyond follows aggressive accounting policies. The quality of disclosure that a 10-k provides is of high importance to potential investors. Bed Bath &
Beyond inadequately discloses line item information within financial statements, and fails to go beyond what is already there. This lack of disclosure appears to be the industry standard, and requires a more meticulous evaluation of the numbers presented in