I need help to make the intended audience, and the overall purpose of the report

Question

I need help to make the intended audience, and the overall purpose of the report is to provide the information needed for the reader to determine if this company is a wise investment choice. I'm working report on TJX Companies. I need help with:

1 - Introduction and company background. (2 paragraphs)

2 - Discuss the accounting methods chosen by the company and the impact of those choices on the financial statements. These choices likely will include the company's inventory-costing and depreciation methods as well as other methods you consider significant. (3 paragraphs)

*Heres the link for TJX company's info*

http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_TJX_2016.pdf

Explanation / Answer

The TJX Companies, Inc., is an American apparel and home goods company based in Framingham, Massachusetts. It claims to be the largest international apparel and home fashions off-price department store chain in the United States. The company evolved from the Zayre discount department store chain, founded in 1956, which opened its first branch of T.J.Maxx in 1976 and its first BJ's Wholesale Club in 1984. In 1988, Zayre sold its nameplate to rival Ames, and T.J.Maxx was renamed The TJX Companies, Inc.

Ernie Herrman serves as company CEO since January 31, 2016. The corporate headquarters are located at 770 Cochituate Road in Framingham, Massachusetts.

In 1990, TJX expanded into an additional store brand division, as it entered the Canadian market by acquiring the five-store Winners chain. TJX's expansion beyond North America came in 1994, when the fourth brand division, T.K. Maxx, was founded in the United Kingdom, and then expanded into Ireland. In 1995, TJX doubled in size when it acquired Marshalls, its fifth brand. T.J.Maxx and Marshalls later became consolidated as two brands under a single division, The Marmaxx Group. The following year, TJX Companies Inc. was added to the Standard & Poor's S&P 500 Composite Index, which consists of 500 of the largest companies in the United States.

Some Accounting Methods Chosen By The Company

Inventory Valuation : The company uses retail method of valuing inventory. Under the retail method, the cost value of money and gross margins are determined by calculating a cost-to-retail ratio and applying it to the retail value of inventory. It involves management estimates with regard to markdowns and inventory shrinkage. Inventory Shrinkage requires estimating a shrinkage rate for interim periods, but the company takes a full physical inventory near the fiscal year end to determine shrinkage at the year end.

Impairement of long-lives assets, goodwill and tradename : The company evaluates the recoverability of the carrying value of its long-term assets, goodwill and trade names atleast annually and whenever circumstances occur that indicate that the carrying amounnts of those assets are not recoverable. Significant judgement goes into evaluation of prospective cash flows of individual business units, including factors like historical trend, recent performance and general economic assumptions. The fair value of the comapny's business units currently exceeds the carrying value by significant amount with an exception of Sierra Trading Post (STP). The company is constantly trying to convert STP from promotional model to off-price model and expand its store base.

Retirement costs : The Retirement costs are accrued over service life of an employee and represent, in aggregate obligations that will ultimately be settled far in the future and are therefore subject to estimates. For this the company is required to make economic, demographic and discount rate assumptions. These assumptions are revised annually based on market interest rates and can have an impact on annual cost of retirement benefits and funded status of company's qualified pension plan. Say for example, a change of 0.25% in the required rate of return of the company results in change in the 2017 pension cost by approximately $3 million. When the discount rate, market performance or change in laws have a negative impact on comapny's funded status, the company increases its voluntary contribution in the plan.

Share Based Compensation : In accordance with GAAP, the company estimates the fair value of stock awards of employees and directors under stock incentive plan. The fair value is amortized as 'share based compensation' over the vesting periods during which the recipients are required to provide service.

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