The US Automotive Industry - Research Paper Example

The US Automotive Industry and of the Executive Summary The US automotive industry is one the vibrant sectors of the US economy; it is also described as one of the largest automotive industry in the world. The American automotive industry accounts for 3.5% of the total US Gross Domestic Product. The significant size of the US automotive industry is attributed to the large number of automakers, as well as automotive wholesaler and retailers. These firms are involved in the manufacturing, wholesaling and retailing of complete automobiles, and auto parts. Among the successful automotive firms include Autonation and CarMax. Both CarMax and AutoNation engage in the sale of used vehicles; however, they also trade new vehicles. This report sheds light on the US automotive industry which experienced sale of 15,600 vehicles in 2013. The report further assesses the past financial performance of CarMax and AutoNation. Among the financial aspects that would be analysed include, the revenue and working capital. Additionally, the report analyses the strategies that are used by both AutoNation and CarMax to maintain a competitive edge at the market. Table of Contents Executive Summary 2 1.0 Introduction 3 2.0 The Automobile Industry Economic Characteristics 4 3.0 The Company Strategies 8 3.1 The AutoNation’s Strategy 9 3.2 The CarMax’s Strategies 12 4.0 The Financial Statements 15 4.0 CarMax 15 Revenue 15 4.2 AutoNation 20 5.0 Conclusion 25 Appendices 27 1.0 Introduction AutoNation is rated as the largest automotive firm that retail vehicles in the US (Morningstar 1). It is also considered the top company that offers both used and new vehicles to the market. With its foundation dating back to 1996, the company runs more than 260 dealerships in the United States (AutoNation 1). The company’s headquarters is based in Florida. According to AutoNation, the management of the company consists of the Chief Executive Officer, Mike Jackson and the COO (Chief Operation Officer), Maroone Mike. AutoNation experienced revenue of $17.517 billion as of 2013 (1). However, the total equity stood at $2.061 billion in the same year (AutoNation 1). On the other hand, Morningstar shows that CarMax is the largest company that engages in the selling of used cars (1). The company was founded in 1993 (CarMax 1). Currently, the company boasts of one-hundred and twenty-eight stores where the pre-owned vehicles are sold (CarMax 1). The headquarters of the company is located in Virginia, US. Under the leadership of the Chairperson, Mr. Tiefel William, the Chief Executive Officer, Folliard Thomas and the Chief Finance Officer, Mr. Reedy Tom, CarMax managed to record revenue of $12.547 billion as of February 2014 (CarMax 1). This report is set analyse the economic features of the US automotive industry. Additionally, the report would assess the strategies that are used by AutoNation and CarMax. The report would finally analyse the quality of the two automotive companies’ financial statements. 2.0 The Automobile Industry Economic Characteristics Globally, the US is considered as one of the largest automotive markets; the US has thirteen automakers (Morningstar 1). Researches by SELECTUSA point out that from 2008 to 2012 the manufacturers produced more than 8,000 thousand passenger cars every year (1). Automakers from popular countries, such as Korea, Japan and German, have automotive plants in the US. Among the major automakers include Ford, SELECTUSA shows that the general Motors, BMW, Mazda, Subaru and Toyota; these automotive firms have manufacturing facilities in the US (1). The last automaker to launch a manufacturing facility among the 13 is Volkswagen (Morningstar 1). Moreover, various automakers in the US also have engine manufacturing facilities. The automakers normally carry out research and development with an objective to remain relevant among the automotive consumers who are sensitive as far as technology is concerned. Other activities that are performed by the automotive firms include designing, as well as testing; these activities are carried out to maintain a competitive edge for a firm as far as meeting or exceeding the needs of consumers are concerned. Economically, SELECTUSA implies that the US automotive market comprises of 3.5% of the GDP (1). This is the main reason why the automotive industry employed more than 785,000 individuals at the beginning of 2012 (Morningstar 1). SELECTUSA estimates that suppliers supplied auto parts that were worth $225 billion in 2012 (1). The value of the auto parts that were supplied to individuals in the US is estimated to account for almost 4% of the total manufacturing that is experienced by the US economy (SELECTUSA 1). Researches by SELECTUSA indicate that at the beginning of 2013, the direct and indirect employment that was associated with the manufacturing and supply of auto parts is projected at 3,620 thousand (1). Although the company faced a number of challenges in the recent past, the auto industry is currently performing well due to extensive research and development programs. At the end of the accounting period 2012, it is estimated that about 2,600 vehicles were exported to diverse countries (Morningstar 1). The number of vehicles that were exported to various nations is approximated at a value of $63,000 million. The value of auto parts that were exported to various nations in the world is estimated at $75,000 million (SELECTUSA 1). Table 1 A Comparison of Vehicles and Auto Parts Export Values ($) Source: SELECTUSA, The Automotive Industry in the United States, Jun. 2014, Web. In 2013, it is approximated that the number of new vehicles that were sold are 15,600 thousand vehicles; this is an improvement given that the number of new vehicles that were sold in 2013 were approximated at 14,500 thousand (SELECTUSA 1). In 2011, the number of new vehicles that were sold is approximated at 12,700 thousand. It is established that the high number of new vehicles which were sold was attributed to a high number of replacements. Currently, SELECTUSA shows that the average age of vehicles in the US are approximated at level of eleven years and five months (1). This is a major improvement given that the period between 2002 and 2007 the age period of vehicles were estimated at 9 years and 10 months. The high number of the sale of new vehicles is attributable to the expansion of the credit market, as well as the increase in the number of new products that are available to the vehicle consumer-market. The availability of new products is normally enhanced by the availability of technology; many automakers consistently perform research to design and manufacture vehicles which are more likely than not to embrace the consumer market. Despite the increase in the number of new vehicles that were purchased in 2013, statistics indicate there was an increasingly pressure in the market as a result of a stiff competition (SELECTUSA 1). The reduction in the margin profit that occurred as a result of an increased competition was offset by the presence of a significant profit that was realized in financing and insurance. Table 2 Source: Source: SELECTUSA, The Automotive Industry in the United States, Jun. 2014, Web. Presently, the automakers are projecting that the number of vehicles to be sold in the market would increase to 16,000 thousand at the end of 2014 (SELECTUSA 1). The automotive industry players believe that the increase in the number of sold vehicles is likely to be buttressed by the need to replace a car, the availability of diverse attractive vehicles as well as relatively cheap credit. It is currently established that the yearly-new-model vehicles, which are operational, are increasing constantly following the augmentation in the purchase of new vehicles since 2009 (SELECTUSA 1). In this regard, it is expected that customers would continue to benefit from the warranty of auto parts. Similarly, the automakers are expected to continue benefitting from the shift of using the old vehicles to newer ones. Among the factors that would make the US automotive industry perform exceptionally include: an open policy regarding investment; a relatively large market; the presence of skilled labour; the availability of incentives that are offered by the government; and, enhanced level of infrastructure. 3.0 The Company Strategies Various companies normally use different strategies in an attempt to ensure that they maintain a competitive edge at the market. Generally speaking, examples of strategies that are embraced by firms in their daily operation include the cost leadership and product differentiation. As far as the cost leadership is concerned, a firm normally attempts to reduce its costs of operation with a view of selling its products at a low price. Similarly, a company may lower the price of its product in an endeavour to experience a significant profit from the sale of a large volume of products. On the other hand, a firm can decide to differentiate its product from those of other players in the market with a view of earning a competitive edge. In most cases, a supplier may attempt to produce quality products or embrace other approaches, such as design, to differentiate its product from others in the market. However, there are other strategies which are employed by diverse firms such as an in-house manufacturing or outsourcing the manufacturing services with a view of focusing on the core activities. All these strategies are aimed at creating a value for a firm. Similar to other firms, AutoNation and CarMax are associated with a number of strategies that are focused on improving their performances in the market. 3.1 The AutoNation’s Strategy AutoNation aims to achieve a high level of return as well as experience an exceptional management of its operation. The firm believes that it can achieve an excellent management and returns via its large scale of operation, and highly skilled managers. However, to achieve these successes, AutoNation is focused to pursue a number of strategies. One of the concepts that the company utilizes to create value for its activities is the value chain. The AutoNation’s Value Chain Table 3 Source: AutoNation, AutoNation, Jun. 2014, Web. Table 4 The AutoNation’s Swot Analysis Strengths i. The firm is a Component of the Standard and Poor 500 Index ii. The company has more than 220 dealerships in various US states iii. It has a significant internet presence for its activities iv. The biggest auto retailer in the US Weaknesses i. Difficult to handle the inventory since it is large ii. A minimal presence in the world iii. A large number of inspections on second-hand vehicles Opportunities i. There is an opportunity for exporting vehicles to developing economies ii. The firm participates in a variety of auto expos where it displays its models iii. The firm partnered with Edmund.com to start the E-vehicles program Threats i. An increasing prices for fuel ii. There is a stiff competition from other auto retailers such as CarMax and Carforum Source: AutoNation, AutoNation, Jun. 2014, Web. Creating the Most Exceptional Physical and Online Retail Experience among Customers The company believes it can offer an excellent experience to customers via the provision of variety of products, as well as consumer-friendly and transparent services. This strategy can also be pursued through competitive pricing of its products. This can motivate customers to drive their new vehicles to the firm’s stores for various services, such as repair. In many cases, the company encourages its workers to embrace the culture of satisfying the customers; in order to encourage this culture, the company usually base part of the compensation on the satisfaction of a customer. Additionally, the company ensures that customers obtain an outstanding experience by marketing its inventory (auto parts, new and used vehicles) via the internet. The company website ensures that you can search for range of vehicles and related information effectively. These activities are focused to enhancing an excellent experience among customers (AutoNation 1). Leveraging the Large Scale of Operation and Structure of Cost to Enhance the Company’s Efficiency The company attempts to manage both new and pre-owned vehicles with a view of maximizing the use of its stores. Mostly, the company manages the mix of the vehicles to ensure efficiency is achieved in various seasons. Additionally, the company optimizes the use of its stores by ensuring the carrying cost is as low as possible. The company also ensures the administrative and accounting services are administered from one location (the Shared Services Centre); this reduces the cost of operation. Other aspects, such as the offering of the employee training programs, are focused on improving the efficiency of workers and, consequently, that of the company. Via the national vendor relationships, the company is able to lower the costs which are associated with the buying of various equipments, as well as supplies (Morningstar 10). Creating a Strong AutoNation’s Retail Brand That Represents a Powerful Consumer Experience While the company focused on the Import and Domestic stores in the past, AutoNation currently perform its operational activities via a united AutoNation brand which aims at distinguishing its retail products from those of other companies. According to Morningstar, this approach has been embraced since the beginning of 2013 (1). The company is of the view that the import and domestic stores which are unified would improve the consumer’s satisfaction; this would further result in the expansion of the market. The company also believes it would experience a high traffic; it markets its products through a retail brand. The prestigious stores are currently operating under their own retail brands. The company believes that operating under a unique retail is fundamental as far as the success of an organization is concerned. Diversification through Franchising The company is resolved to continue benefiting from a diversified retail franchises. The company’s income of about thirty-eight percent was realized via the premium luxury franchises. An income that amounts to 33% of the total profit relates to the import franchises (Morningstar 1). In order to continue experiencing a success on the market through franchising, the company attempts to seek opportunities relating to new stores that are likely to enhance the sale of the company’s vehicles- the retail brand. However, the stores should ensure that the company is able to earn a reasonable return. 3.2 The CarMax’s Strategies The table below shows the value chain via which the company creates value for its diverse activities. The Value Chain of CarMax Table 5 Source: CarMax, CarMax, Jun. 2014, Web. Table 6 The CarMax SWOT Analysis Strengths i. CarMax is a component of the S&P 500 Index ii. The company has more than 120 superstores iii. CarMax is the top company among the used-vehicles retailers in the US Weaknesses i. It is difficult to handle the inventory since it is large ii. The global presence is relatively minimal iii. The operational costs of stores is high; each store is estimated at fifty-nine thousand square feet Opportunities i. There is an export opportunity to developing economies ii. The firm participates in a range of auto expos where it displays the various car designs iii. There is an increasing demand for used cars Threats i. An increasing fuel prices may impact negatively on the automotive industry ii. An increase in the prices of raw materials leads to high cost of vehicles iii. There is a stiff competition from AutoNation and Edmund Source: CarMax, CarMax, Jun. 2014, Web. A Significant Investment in the Sales Operations and Finance Services CarMax is the leading auto retailer as far as the used vehicles is concerned. However, the company ensure it maintain a competitive edge at the market by investing in two major segments; this include the sales operation and finance. The sales operation segment is concerned with merchandising and related services. On the other hand, the auto finance is associated with the provision of finance services in its main stores. As far as financing is concerned, the company customarily assesses the credit history of a customer, as well as the historical performance of the company’s debt performances to predict the probability of a customer settling the extended credit. In order to ensure customers are satisfied with the finance arrangement, CarMax provides a range of reasonable interest rates. In the end of 2013, the CarMax Auto Finance serviced about 514 thousand customers. The serviced clients’ accounts amounted to 6,920 million of the company’s receivables (CarMax 1). The Car Super Concept This strategy is employed by CarMax in an attempt to earn an edge in the market. Having established its operations in 1993, the concept endeavours to address a range of customer dissatisfactions that characterize the traditional auto firms (CarMax 1). The company also attempts to standardize its operational processes through the use of advanced management information systems. A Heavy Investment in Used vehicles CarMax is the largest auto-retailer in the US as far as the retailing of used vehicles is concerned. The company has one-hundred and twenty-six stores that are concerned with the selling of used vehicles. These superstores are located in sixty-three different markets. Among them, include forty-seven medium-sized and three small markets: the large markets are thirteen (Morningstar 1). According to Morningstar, the large market comprises of individuals that view televisions- this population ranges from 600 thousand to 2,500 thousand; the company also owns 4 franchises (1). As of the end of the accounting period 2013, CarMax managed to sell approximately 447.728 thousand pre-owned vehicle at a retail level; this is about 98% of the total vehicles that were sold by CarMax (Morningstar 1). In total, Morningstar shows that the company managed to sell 455.583 thousand vehicles at the retail level to various consumers in its diversified market (1). 4.0 The Financial Statements 4.0 CarMax Revenue The revenue of CarMax increased consistently between 2011 and 2014. As of February 2011, the company reported revenue of $8,976 million (CarMax 1). The revenue rose to $10,004 million in February 2012. The company experienced revenue of $10,963 and $12,574 million in 2013 (February) and 2014 (February) respectively (CarMax 1). This indicates that the company’s sales increased consistently as a result of an increased market share; this trend is likely to occur in the near future given that the company would continue to extend credit with competitive interest rates to customers. Similarly, the fact that the US and global economy is witnessing a positive growth following the financial crisis of 2008, it is expected that a large number of individuals would continue to replace vehicles as well as buy new ones for the first time; this would see the demand for vehicles increase consistently in the near future. Table 7 Source: CarMax, CarMax, Jun. 2014, Web. The Gross Margin and Operating Income The gross margin decreased consistently in a period of four years. As of February 2011, the gross margin was established at 14.5%; the gross margin decreased to 13.8% in the same month as of 2012 (CarMax 1). The accounting period of 2013 and 2014 saw the gross margin drop to 13.4% and 13.1% respectively (CarMax 1). While the operating income increased constantly between 2011 and 2013, the income dropped in February 2014. The operating income rose from $616 million in 2011 to $700 million and $733 million in 2012 and 2013 respectively (CarMax 1). However, Morningstar shows that the operating income dropped to $493 million as of February 2014 despite the revenue of the same accounting period being recorded at the highest level relative to the revenues of the past 9 years (1). The drop in the level of the operating income is attributable to a high level of costs. However, the company expects to experience a decrease of the operating costs in the future; if the operating costs decrease, the company is likely to experience a high level of revenue given that the market share is increasing constantly as projected by the growth of revenues. Earnings per Share The company’s earnings per share increased constantly in the last four years. In February 2011, the earnings per share were estimated at $1.67; the earnings per share increased to $1.79 at the end of the next accounting period. The earnings per share as of February 2013 and 2014 were established at $1.87 and $2.16 respectively (CarMax 1). The increase in the level of the earnings per share is likely to continue attracting more investors to purchase the CarMax’s shares. This is due to the fact that a large number of investors are typically attracted to investments that promise a high level of return. Free Cash Flow and Working Capital While the free cash flow declined consistently in 2011, 2012 and 2013, the figure dropped in 2014. As of February 2011, the free cash flow was established at -$94 million; that of 2012 was reported at -$235 million showing a decrease of -$241 million (CarMax 1). The free cash flow decreased significantly in 2013; it was estimated at -$1,014 million. However, the 2014 free cash flow witnessed an increase of $91 million (CarMax 1). The decrease in the level of free cash flow is attributable to a significant credit extension to customers; CarMax is associated with a substantial extension of credit to its customers through the CarMax Auto Finance. However, CarMax points out that the working capital increased constantly in the financial period of 2011, 2012, 2013 and 2014 (1). The working capital increased from $902 million as of February 2011 to $1,207 million and $1,626 million in 2012 and 2013 respectively (Morningstar 1). The working capital of February 2014 increased further to $1,768 million (CarMax 1). The increase in the level of the working capital indicates that the company stands a chance of meeting maturing debts, as well as the upcoming expenses. Table 8 Source: CarMax, CarMax, Jun. 2014, Web. 2014, Web. The Product Life Cycle: The Growth Stage and Associated Risk CarMax is more likely than not to be at the growth stage; this is evident by a number of aspects, such as the constant increase in revenue, net and operating cash. The revenue increased from $8,976 million in 2011 to $10,004 million in 2012, $10,963 million in 2013 and $12,574 million as February 2014 (Morningstar 1). On the other hand, the net income increased from $381 million in 2011 to $414 million in 2012; the net income further increased to $434 million and $493 million in 2013 and 2014 respectively (Morningstar 1). Although the operating cash flow decreased in 2011 and 2012, 2014 saw the operating cash flow increase to -$778 million from -$613 million in 2014 (Morningstar 1). The company is facing an increasing debt-to-equity ratio; the ratio increased from 3.12 in 2012 to 3.28 in 2013. As of February 2014, the rate increased to 3.53. This indicates that the possibility of the firm facing insolvency (Morning 1). Litigations CarMax appreciates the fact that there are a number of litigation processes whose results are likely to adversely affect the operational and financial performances of the firm. The adverse effects of the legal proceedings include the revocation of a licence with respect to a certain store, legal fees and damage of the company’s reputation. In order to minimize the litigations that are associated with the unexpected litigation proceedings, the firm normally forecasts the future under the ‘Private Securities Litigation Reform Act of 1995’. This reduces the number of frivolous filings lawsuits against the company by investor, as well as employees and consumers (Morningstar 1). The 5-Years Financial Period Sales Projection ($ millions) 2015 2016 2017 2018 2019 18,106.56 21,727.9 26,073.4 31,288.13 37,545.8 It is assumed that the revenues would experience a revenue growth of 20% each year in the next five financial periods. The Free Cash Flow= Operating Cash Flow- Capital Expenditure $613 million - $310 million= $923 million Quality of Earnings Both CarMax and AutoNation share similarities with respect to the accounting procedures. Both firms embrace an accounting method that is likely to enhance its value; the companies use the General Accepted Accounting Principles. This method attempts to recognize that revenue is recognized following the delivery of a product to consumers. The accounting method also upholds the forensic accounting as far as ligation is concerned. While attempting to assign different fees to various litigations, the accounting method emphasizes that the estimates should consider conservatisms (Morningstar 1). 4.2 AutoNation Revenue Similar to CarMax, the revenue of AutoNation increased consistently in the last three accounting periods. The company realized revenue of $13,832 million as of December 2011 (AutoNation 1). The revenue increased further to $15,669 million and $17,518 million in 2012 and 2013 respectively (AutoNation 1). The increase in the level of revenue across the three accounting periods indicates that the company faced an increasingly high level of sales due to an augmented market share. The level of revenues is expected to increase constantly in the near future; the high level of sales in the near future are expected to be associated with new vehicles as opposed to the pre-owned cars since the economy of the US witnessed growth since 2009 (Morningstar 1). Table 8 Source: AutoNation, AutoNation, Jun. 2014, Web. Net Income The net income of AutoNation also increased considerably in the last financial periods. In December 2011, AutoNation experienced a net income of $572 million; the figure rose to $645 million and $740 million in 2012 and 2013 respectively (AutoNation 1). The increase in the level of the net income is associated with the increase in the level of revenues, as well as the profit margin; AutoNation experienced a revenue increase in the last three years. Working Capital and Earnings per Share The working capital is imperative since it determines the ability of a firm to meet the maturing debts and emerging expenses. The free cash flow is one of the components of the working capital. As opposed to the working capital of CarMax, AutoNation’s working capital decreased substantially from $230 million to $214 million and $159 million in 2012 and 2013 respectively (AutoNation 1). The decline in the level of working capital implies that the ability of AutoNation to meet both the maturing debts and emerging expenses is weakened. Morningstar (1) shows that the earnings per share also increased in a span of three years; it increased from $1.91 in 2011 to $2.52 and $ 3.04 in 2012 and 2013 respectively. The increase in earnings per share would attract investment in AutoNation’s shares. Table 9 Source: AutoNation, AutoNation, Jun. 2014, Web. The Free Cash Flow The free cash flow for AutoNation was characterized by inconsistency in a period of three years; in 2011, the free cash flow was reported at $227 million. In 2012, the figure dropped to $156 million; however, it increased in 2013 to $323 million. The Free Cash Flow= Operating Cash Flow- Capital Expenditure $484 million - $161million= $323 million The Product Life Cycle: The Growth Stage and Associated Risk AutoNation is still at the growth stage as far as the product life cycle is concerned. This is evident by increasing revenues, net income and operating cash flows among others. The revenues increased from $12,461 million in 2010 to 13,832 million in 2011 (Morningstar 1). The revenue further grew from $15,669 in 2012 to $17,518 million in 2013 (Morningstar 1). The net income also increased from 227 million in 2010 to $281 million in 2011, $316 million in 2012 and $375 million in 2013 (Morningstar 1). The operating cash flow also increased despite a slight fall in 2012; the operating cash flow increased from $252 million in 2010 to $376 million in 2011 (Morningstar 1). However, the figure dropped to $317 million in 2012; in 2013 the operating cash flow rose to $484 million (Morningstar 1). However, the company’s working has decreased in the past four years. The working capital decreased from $230 million in 2010 to $214 million in 2011. It decreased further to $159 million and $78 million in 2012 and 2013 respectively (Morningstar 1). This indicates that the company is likely to face difficulties in meeting the maturing debts and emerging expenses. This may see a firm face operating difficulties, and reduction in profits. Litigations CarMax understand various litigations have adverse effect on the financial statements. However, the firm understands that various law suits are likely to be filed against its activities; this may result in the revoking of its license with regards to the operation of its stores, as well as financial and reputation damages. The Company projects the future financial performance and plans based on the clauses of the ‘Private Securities Litigation Reform Act of 2005. In this respect, the projected financial statements are based on the present knowledge and the likely future events. Among the lawsuits that have been filed against CarMax, include John Fowler on grounds of failing to offer meal and breaks during work or an equal compensation among other allegations (Morningstar 1). The Estimates of the 5-Years Financial Period Sales Growth ($ Million) 2014 2015 2016 2017 2018 25,225.9 30,271.08 36,325.3 43,590.4 52,308.5 5.0 Conclusion According to SELECTUSA, the automotive industry is considered one of the most successful sectors in the US; it currently accounts for 3.5% of the US GPD (Gross Domestic Product) (1). With respect to the recent past data, the industry is likely to continue experiencing growth in the near future; the growth in the automotive industry would be associated with exports, as well as the domestic market. Given that about 2,600 vehicles were sold to different countries, the export is likely to continue experiencing growth (SELECTUSA 1). The growth in the export market is also underpinned by the 2012 export of auto parts which were recorded at a value of $75,000 (Morningstar 1). The consistent increase in the total number of vehicles sold in 2011, 2012 and 2013 shows that the US automotive industry is likely to grow significantly in the near future. In 2011, the number of vehicles sold was 12,700 while that of 2012 were established at 14,500. The number of vehicles that was sold in 2013 increased to 15,600 (SELECTUSA 1). With reference to the aforementioned data, automotive companies that embrace the best strategies would gain from the growing automotive industry. Works Cited Morningstar. AutoNation at Purdue and Purdue U, n.d. Web. 12 Jun. 2014. < http://quicktake.morningstar.com/stocknet/secdocuments.aspx?symbol=an> Morningstar. CarMax at Purdue and Purdue U, n.d. Web. 12 Jun. 2014. < http://quicktake.morningstar.com/stocknet/secdocuments.aspx?symbol=kmx> AutoNation. Purdue U, n.d. Web. 12 Jun. 2014. < http://www.autonation.com/> CarMax. Purdue U, n.d. Web. 12 Jun. 2014. < http://www.carmax.com/> SELECTUSA. The Automotive Industry in the United States at Purdue and Purdue U, n.d. Web. 12 Jun. 2014. < http://selectusa.commerce.gov/industry-snapshots/automotive-industry- united- states> Appendices CarMax 2011-02 2012-02 2013-02 2014-02 Revenue USD Mil 8,976 10,004 10,963 12,574 Gross Margin % 14.5 13.8 13.4 13.1 Operating Income USD Mil 616 700 733 493 Operating Margin % 6.9 7 6.7 3.9 Net Income USD Mil 381 414 434 493 Earnings Per Share USD 1.67 1.79 1.87 2.16 Shares Mil 228 231 232 228 Book Value Per Share USD 10.15 11.77 13.36 14.96 Operating Cash Flow USD Mil -17 -62 -778 -613 Cap Spending USD Mil -77 -173 -236 -310 Free Cash Flow USD Mil -94 -235 -1,014 -923 Free Cash Flow Per Share USD -0.41 -1.02 -4.37 -4.06 Working Capital USD Mil 902 1,207 1,626 1,768 AutoNation 2011-12 2012-12 2013-12 Revenue USD Mil 13,832 15,669 17,518 Gross Margin % 16.7 15.9 15.8 Operating Income USD Mil 572 645 740 Operating Margin % 4.1 4.1 4.2 Net Income USD Mil 281 316 375 Earnings Per Share USD 1.91 2.52 3.04 Shares Mil 147 126 123 Book Value Per Share USD 13.95 13.97 17.05 Operating Cash Flow USD Mil 376 317 484 Cap Spending USD Mil -149 -161 -161 Free Cash Flow USD Mil 227 156 323 Free Cash Flow Per Share USD 1.54 1.24 2.62 Working Capital USD Mil 214 159 78 Read More