Financial Accounting
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What is the history of this company?
A brief history of Pier 1 is that the company established its corporate headquarters in Fort Worth, Texas in 1966, with 16 store locations. In 1970; Pier 1 went public and became listed on the American Stock Exchange, then in 1972 joined the New York stock exchange, having 123 stores that had 100% of sales at that time.
In the new millennium Pier1 launched their online market. 2001 Pier 1 acquired Cargo Furniture and Home which was established in 1981, as a family-focused selection of casual furniture. Later changing the concept to Cargo kids a specialty retailer, offering value-oriented, fashionable childrens furniture and accessories.
On February 23, 2003, Pier 1 opened its 1,000th North American store.
In August 2004, Pier 1 transitioned from three downtown Fort Worth office locations and moved almost 1,000 employees into Pier 1 Place, the new corporate headquarters.
How did it begin?
“Pier 1 was founded in 1962 as a single store in San Mateo, California and now operates over 1,200 stores in all 50 states, Canada, Mexico, and Puerto Rico. We plan to expand to 1,800 stores by the end of the decade by entering single-store markets and growing areas of major metropolitan centers. This strategy creates new jobs and provides the convenience of a Pier 1 store in active retail communities.”
What differentiates this company from its competitors?
The merchandise assortment which ranges from home accessories such as candles, vases and picture frames to full-sized, upholstered furniture, hand-carved armoires, large-scale vases and eclectic wall dйcor. As much as 75 percent of our merchandise assortment includes new product introductions each year.
Most merchandise makes a long and interesting journey. The buyers develop and import merchandise from more than 50 countries. The shopping environment found in the stores is one that is distinctly Pier 1 and takes the customers on a path of discovery through one-of-a-kind products from around the world.
Also Pier 1 is dedicated to supporting the communities in which their associates live and work as well as the international communities from where they import their merchandise. Since 1985, they have contributed more than $30 million to philanthropic organizations at the international, national and local levels including UNICEF (the United Nations Childrens Fund), the Susan G. Komen Breast Cancer Foundation, the United Way of Metropolitan Tarrant County and our Adopt-A-School, Daggett Elementary School.
current ratio
current assets / current liabilities 1,075,749 / 289,009 = 3.72
inventory turnover ratio
cost of goods sold $1,170,588 / average inventory held $380,730 = 3.075
accounts receivable turnover ratio
credit sales / average accounts receivable
1,897,000.9 / (380,730 + 373,870 / 2)
1,897,000.9 / (754,600 / 2)
1,897,000.9 / 377,300 = 5.03
debt to equity
total liabilities / total share holders equity
289,009 / 664,369 = 43.5%
return on assets
net income / average total assets
60,000,000.5 / 660,690 = 90.81
return on equity
net income / invested capital
60,000,000.5 / 141,850 = 422.98
gross margin on sales
sales – cost of goods sold / sales
1,897,853 – 1,170,588 = 727,265 / 1,897,853 = 38.3
What do these ratios indicate about the company?
For the first question taking each individual ratio and comparing the industry average to Pier 1 I get the following:
Pier 1 Industry average
current ratio : 3.72 1.9
inventory turnover ratio:
3.075 1.0
accounts receivable turnover ratio:
5.03 3.7