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Question: Refer to the financial statements of American

Refer to the financial statements of American Eagle (Appendix B) and Urban Outfitters (Appendix C) and the Industry Ratio Report (Appendix D) at the end of this book. Compute the following ratios for fiscal 2014: return on equity, basic earnings per share, net profit margin, inventory turnover, current ratio, debt-to-equity ratio, price/earnings ratio, and dividend yield. Assume the stock price is $40 for Urban Outfitters and $16 for American Eagle. Compare the ratios for each company to the industry average ratios. Financial statements of American Eagle:
Refer to the financial statements of American Eagle (Appendix B) and Urban Outfitters (Appendix C) and the Industry Ratio Report (Appendix D) at the end of this book. Compute the following ratios for fiscal 2014: return on equity, basic earnings per share, net profit margin, inventory turnover, current ratio, debt-to-equity ratio, price/earnings ratio, and dividend yield. Assume the stock price is $40 for Urban Outfitters and $16 for American Eagle. Compare the ratios for each company to the industry average ratios.
Financial statements of American Eagle:


Financial statements of Urban Outfitters:


Refer to the financial statements of American Eagle (Appendix B) and Urban Outfitters (Appendix C) and the Industry Ratio Report (Appendix D) at the end of this book. Compute the following ratios for fiscal 2014: return on equity, basic earnings per share, net profit margin, inventory turnover, current ratio, debt-to-equity ratio, price/earnings ratio, and dividend yield. Assume the stock price is $40 for Urban Outfitters and $16 for American Eagle. Compare the ratios for each company to the industry average ratios.
Financial statements of American Eagle:


Financial statements of Urban Outfitters:

Financial statements of Urban Outfitters:
Refer to the financial statements of American Eagle (Appendix B) and Urban Outfitters (Appendix C) and the Industry Ratio Report (Appendix D) at the end of this book. Compute the following ratios for fiscal 2014: return on equity, basic earnings per share, net profit margin, inventory turnover, current ratio, debt-to-equity ratio, price/earnings ratio, and dividend yield. Assume the stock price is $40 for Urban Outfitters and $16 for American Eagle. Compare the ratios for each company to the industry average ratios.
Financial statements of American Eagle:


Financial statements of Urban Outfitters:





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Far he Year End) ie n, erg per shere a , ln and er feewil infurein Swmmary of Operatrions (2) Total net revenue Comparable sales increase (decreaseX3) Gross profit Gross profit as a Juary 31, Febraary 1 Junary Febrary . 2014 Juary 19 3,282,867 3,305,802 3,475,802 3,120,065 2,945 294 (6)% 4% (1% 1,154,674 1,113,999 1,390,322 1,144,594 1,182,151 percentage of net sales Operating income Operating income as a percentage of net sales Income from continuing 35.2% 33,7% 40.0% 36.7% 40.1% 155,765 141,055 394,606 269335 339 552 4.7% 4.3% 11.4% 8,6% I1.5% 88,787 82,983 264,098 175,279 195,731 operations Imcome from continuing operations as a percentage of net sales Per Share Resalt Income from continuing operations per common share-basic Income from continuing operations per common share-diluted Weighted average 2.6% 2.5% 76% 5.6% 6.7% 0.46 0.43 135 0.90 0.98 0.46 0.43 1.32 0.89 0.97 common shares outstanding- basic Weighted average 194,437 192,802 196.211 194,445 199.979 common shares outstanding-diluted Cash dividends per 195,135 194,475 200,665 196314 201,818 0.375 044 093 common share Balance Sheet 0.50 2.05 Information Total cash and shon-term investments Long-lerm investments Total assets 410,697 428,935 630,992 745,044 734.695 847 5,915 1,696.908 1,694,164 1,756,053 1,950,802 1,879,998 Shon-term debt Long-term debt Stockholders' equity Working capital Current ratio 1,139,746 1,166,178 1,221,187 705,898 2.62 1,416,851 1,351,071 431,420 1.94 512,513 882,087 3.18 786,573 3.03 2.23 Avemge return on stockholders' equity 7.7% 7.0% 17.6% I1.0% 9.6% Onher Flnancal Information (2) Total stores at year-end Capital expenditures Net sales per average selling square foott4) Total selling square feet at end of period 1,056 245,002 1,066 1,044 93,939 1,069 1,077 75,904 278,499 89,466 $25 347 602 547 526 5,294,744 5,205,948 4,962,923 5,028,493 5,026,144 Net sales per average gross square foot(4) Total gross square feet at end of period Number of employees at end of period 420 444 489 438 422 6,613,100 6,503,486 6,023,278 6,290,284 6,288,425 38,000 40,400 40,100 39,600 39,900 24 Fiscal Year Ended January 31, 2013 (in thousands, except share amounts and per share data) 2015 2014 2012 2011 Income Statement Data: Net sales $ 2,794,925 3,086,608 1,161,342 2$ 3,323,077 2$ 2$ Gross profit Income from operations 2,473,801 860,536 284,725 2,274,102 936,620 414,203 1,174,930 1,031,531 365,385 426,831 374,285 Net income 232,428 282,360 237,314 185,251 272,958 Net income per common share-basic Weighted average common shares outstanding basic 1.70 1.92 1.63 1.20 1.64 136,651,899 147,014,869 145,253,691 154,025,589 166,896,322 Net income per common share diluted Weighted average common shares outstanding diluted $ 1.68 1.89 1.62 1.19 1.60 138,192,734 149,225,906 146,663,731 156,191,289 170,333,550 Balance Sheet Data: Working capital Total assets 24 455,377 24 663,150 622,089 1,797,211 442,623 1,354,588 363,526 24 592,953 1,888,741 2,221,214 1,483,708 417,440 1,794,321 Total liabilities 560,772 527,044 382,773 Total shareholders' equity 1,327,969 24 1,694,170 %24 SAc60208 Windows 1,411,548


> Match the following. Answers may be used more than once: Measurement Method A. Amortized cost 1. Less than 20 percent ownership. B. Equity method C. Acquisition method and consolidation D. Fair value method 2. Current fair value. 3. More than 50 perc

> Company W purchases 10 percent of Company Z and Company W intends to hold the stock for at least five years. At the end of the current year, how would Company W’s investment in Company Z be reported on Company W’s December 31 (year-end) balance sheet? a.

> Company X owns 40 percent of Company Y and exercises significant influence over the management of Company Y. Therefore, Company X uses what method of accounting for reporting its ownership of stock in Company Y? a. The amortized cost method. b. The equit

> Lamichael Company purchased 100 percent of the outstanding voting shares of Darrell Corporation in the open market for $230,000 cash and Darrell was merged into Lamichael Company. On the date of acquisition, the fair value of Darrell Corporation’s proper

> Which of the following is true regarding the economic return from investing ratio? a. This ratio is used to evaluate how efficiently a company manages its total assets. b. This ratio is used to evaluate the efficiency of a company given the capital contr

> Bott Company acquired 500 shares of stock of Barus Company at $53 per share as a long-term investment. This represents 40 percent of the outstanding voting shares of Barus. During the year, Barus paid stockholders $3 per share in dividends. At year-end,

> Match each ratio or percentage with its computation. Ratios or Percentages Definitions 1. Net profit margin 2. Inventory turnover ratio A. Net Income + Net Sales Revenue 3. Average days to collect receivables 4. Dividend yield ratio 5. Return on equi

> Bott Company acquired 500 shares of stock of Barus Company at $53 per share as a long-term investment. This represents 10 percent of the outstanding voting shares of Barus. During the year, Barus paid stockholders $3 per share in dividends. At year-end,

> When using the equity method of accounting, when is revenue recorded on the books of the investor company? a. When a dividend is received from the affiliate. b. When the fair value of the affiliate stock increases. c. When the affiliate company reports n

> When recording dividends received from a stock investment accounted for using the equity method, which of the following statements is true? a. Total assets are increased and net income is increased. b. Total assets are increased and total stockholders’ e

> Realized gains and losses are recorded on the income statement for which of the following transactions in trading securities and available-for-sale securities? a. When adjusting a trading security to its fair value. b. Only when recording the sale of a t

> Dividends received from stock that is reported as an available-for-sale security in the long-term assets section of the balance sheet are reported as which of the following? a. An increase to cash and a decrease to the investment in stock account. b. An

> You have the opportunity to invest $10,000 in one of two companies from a single industry. The only information you have is below. Which company would you select? Justify your choice. Industry Average Ratios for Current Year Company A Company B Curre

> Working together as a team, select an industry to analyze. Yahoo Finance provides lists of industries at biz.yahoo.com/p/industries.html. Click on an industry for a list of companies in that industry. Alternatively, go to Google Finance at www.google.com

> Explain how a company’s accounting policy choices can affect its ratios

> What do market ratios focus on? What is an example of a market ratio and how is it computed?

> What do solvency ratios focus on? What is an example of a solvency ratio and how is it computed? Exhibit 13.3:

> Compute the component percentages for Lowe’s income statement below. Discuss any trends you observe. LOWE'S COMPANIES, INC. Consolidated Statements of Earnings (in millions, except per share and percentage data) Fiscal Years Ended o

> What do liquidity ratios focus on? What is an example of a liquidity ratio and how is it computed?

> What do turnover ratios focus on? What is an example of a turnover ratio and how is it computed?

> What do profitability ratios focus on? What is an example of a profitability ratio and how is it computed?

> What are component percentages? Why are they useful?

> Explain why rapid growth in total sales might not necessarily be a good thing for a company.

> Company A uses the FIFO method to account for inventory and Company B uses the LIFO method. The two companies are exactly alike except for the difference in inventory cost flow assumptions. Costs of inventory items for both companies have been rising ste

> Use the data in Problem 5 for Prince Company. Assume that the stock price per share is $28 and that dividends in the amount of $3.50 per share were paid during Year 2. Compute the following ratios: · Earnings per share · Current ratio

> Use the data given in Problem 5 for Prince Company. Data from Problem 5: The comparative financial statements for Prince Company are below: Required: 1. Compute component percentages for Year 2. 2. Compute the ratios in the DuPont model for Year 2.

> The comparative financial statements for Prince Company are below: Required: 1. Complete the following columns for each item in the preceding comparative financial statements: INCREASE (DECREASE) from Year 1 to Year 2 Amount Percent 2. By what amoun

> The current year financial statements for Blue Water Company and Prime Fish Company are presented below. Both companies are in the fish catching and manufacturing business. Both have been in business approximately 10 years, and each has had steady growth

> The following selected financial data pertain to four unidentified companies: The above financial information pertains to the following companies: a. Full-line department store b. Wholesale fish company c. Automobile dealer (low-priced used cars) d. Rest

> Using the financial information presented in Exhibit 13.1, calculate the following ratios for The Home Depot: · Return on equity · Return on assets · Total asset turnover · Inventory turnover · Current ratio · Quick ratio · Cash coverage ratio · Debt-to-

> You have the opportunity to invest $10,000 in one of two companies from a single industry. The only information you have is below. Which company would you select? Justify your choice. Ratios for Current Year Company A Company B Industry Average Curre

> Company X and Company Y are two giants of the retail industry. Both offer full lines of moderately priced merchandise. In the last fiscal year, annual sales for Company X totaled $53 billion and annual sales for Company Y totaled $20 billion. Compare the

> California Pizza Kitchen opened its first restaurant in Beverly Hills in 1985. Almost immediately after the first location opened, it expanded from California to more than 250 locations in more than 30 states and 11 countries. California Pizza Kitchen co

> Ramesh Company has prepared preliminary financial results that are now being reviewed by the accountants. You notice that the current ratio is 2.4 and the quick ratio is 3.7. You recognize that this is unusual. Does it imply that a mistake has been made?

> Youngstown Corporation is considering changing its inventory method from FIFO to LIFO. Assume that inventory prices have been increasing. All else equal, what impact would you expect the change to have on the following ratios: net profit margin, fixed as

> Compute the component percentages for Lowe’s income statement below. Discuss any trends you observe. LOWE'S COMPANIES, INC. Consolidated Statements of Earnings (in millions, except per share and percentage data) Fiscal Years Ended o

> The following selected financial data pertain to four unidentified companies: The above financial information pertains to the following companies: a. Full-line department store b. Wholesale fish company c. Automobile dealer (low-priced used cars) d. Res

> The following selected financial data pertain to four unidentified companies: The above financial information pertains to the following companies: a. Cable TV company b. Grocery store c. Accounting firm d. High-end jewelry store Required: Match each co

> The following selected financial data pertain to four unidentified companies: The above financial information pertains to the following companies: a. Travel agency b. Hotel c. Meat processing company d. Drug company Required: Match each company with it

> The following selected financial data pertain to four unidentified companies: The above financial information pertains to the following companies: a. Cable TV company b. Grocery store c. Accounting firm d. High-end jewelry store Required: Match each co

> The following selected financial data pertain to four unidentified companies: The above financial information pertains to the following companies: a. High-end clothing store b. Advertising agency c. Wholesale candy company d. Car manufacturer Required:

> Dollar General Corporation operates general merchandise stores that feature quality merchandise at low prices. All stores are located in the United States, predominantly in small towns in 24 mid western and southeastern states. In the current year, the c

> Assume current assets totaled $120,000 and the current ratio was 1.5 before the following independent transactions: (1) Purchased merchandise for $40,000 on short-term credit. (2) Purchased a delivery truck for $25,000. Paid $3,000 cash and signed a two-

> Match each ratio or percentage with its computation. Ratios or Percentages Definitions 1. Net profit margin 2. Inventory turnover ratio A. Net Income + Net Sales Revenue 3. Average days to collect receivables 4. Dividend yield ratio 5. Return on equi

> From DuPont model. Using that framework, find the missing amount in each of the following cases: Case 1: ROE is 10 percent; net income is $200,000; the total asset turnover ratio is 5; and net sales are $1,000,000. What is the amount of average stockhold

> In this chapter, we discussed the importance of analyzing financial results based on an understanding of the company’s business strategy. Using the DuPont model, we illustrated how different strategies could earn high returns for investors. Assume that t

> Barton Company requested a large loan from First Federal Bank to acquire a tract of land for future expansion. Barton reported current assets of $1,900,000 ($430,000 in cash) and current liabilities of $1,075,000. First Federal denied the loan request fo

> The following selected financial data pertain to four unidentified companies: The above financial information pertains to the following companies: a. Travel agency b. Hotel c. Meat processing company d. Drug company Required: Match each company with it

> Refer to the financial statements of Urban Outfitters given in Appendix C at the end of this book. Compute the following ratios for fiscal 2014: return on equity, basic earnings per share, net profit margin, inventory turnover, current ratio, debt-to-equ

> Refer to the financial statements of American Eagle Outfitters given in Appendix B at the end of this book. Compute the following ratios for fiscal 2014: return on equity, basic earnings per share, net profit margin, inventory turnover, current ratio, de

> The comparative financial statements for Summer Corporation are below: Required: 1. Complete the following columns for each item in the preceding comparative financial statements: INCREASE (DECREASE) from Year 1 to Year 2 Amount Percent 2. By what am

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> The following selected financial data pertain to four unidentified companies: The above financial information pertains to the following companies: a. High-end clothing store b. Advertising agency c. Wholesale candy company d. Car manufacturer Required:

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> What are the major categories of business activities reported on the statement of cash flows? Define each of these activities.

> What are cash equivalents? How are purchases and sales of cash equivalents reported on the statement of cash flows?

> What information does the statement of cash flows report that is not reported on the other required financial statements?

> Compare the purposes of the income statement, the balance sheet, and the statement of cash flows.

> How is the sale of equipment reported on the statement of cash flows under the indirect method?

> Sharp Screen Films, Inc., is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as foll

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> Refer to the information for Rodriguez Company in Exercise 8. Data given in Exercise 8: Rodriguez Company completed its income statement and comparative balance sheet for the current year and provided the following information: In addition, Rodriguez bo

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> During the period, Sanchez Company sold some excess equipment at a loss. The following information was collected from the company’s accounting records: From the Income Statement Depreciation expense …………………………….$ 1,500 Loss on sale of equipment ………………………

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> To compare statement of cash flows reporting under the direct and indirect methods, enter check marks to indicate which items are used with each method. STATEMENT OF CASH FLOWS METHOD Cash Flows (and Related Changes) Direct Indirect 1. Accounts payab

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> Refer to the financial statements of American Eagle Outfitters in Appendix B and Urban Outfitters in Appendix C. Financial statements of American Eagle: Financial statements of Urban Outfitters: Required: 1. Compute the quality of income ratio for both

> Refer to the financial statements of Urban Outfitters in Appendix C at the end of this book Financial statements of Urban Outfitters: Required: 1. Does Urban Outfitters use the direct or indirect method to report cash flows from operating activities? 2

2.99

See Answer