GameStop is a small retailer that specializes in video game hardware and software. The company also runs Kongregate, which is an online browser based game website allowing players to play smaller games. Kongregate makes its money using micro transactions, which are smaller transactions within the games. GameStop sells new and used hardware and software games on console, and also sells new computer based games as well. GameStop has over 6,500 actual locations spread throughout multiple countries along with a website through which more business is conducted. It is a leader in the gaming industry and is ranked 262 on the Fortune 500 list. Its main competitors are retail giants such as Wal-Mart and Best Buy who sell the same blockbuster titles as well. A horizontal analysis of the company shows the following for three years ending January …show more content…
The cost of goods did decrease while gross profits increased each year, which means they were able to acquire goods for less and sell for more. This shows that their pre-owned game sales likely increased due to the economy. Operating costs did drop slightly going into 2010 and maintained the same cost going into 2011, which means they did not put much more into their operations, but it also means they were probably unable to find a way to cut costs. This can be difficult if they rent because some places have a fixed amount of rent while others may rise and lower depending on realty in the various …show more content…
This is likely due to the increased inventory on hand that was not sold during the fiscal year. Even though the company technically had more assets, less of it was considered liquid because it was in inventory, less current assets, a drop in intangible assets, and a rise in current liabilities. GameStop went from 1,655.7 million in 2010 up to 1,747.8 million in 2011. The factor that made up the bulk of this difference was accounts payable, which indicates that there were probably loans taken out to cover the expansion of the company. Since the only real direct competitors of GameStop are giant retailers like Best Buy and Wal-Mart, they probably have more liquid assets available. GameStop does not have much in the way of liquid assets because they are still working on expanding even more. Between 2010 and 2011, total store numbers increased from 6,450 to 6,670. This is why cash and liquid assets are lower in 2011, because the company has been expanding and working on building more revenue up. It seems that GameStop is continuing to reinvest in itself by expanding and making the company available to more