Student Name: Instructor
Class: McGraw-Hill/Irwin
Problem 14-05
Price Waterhouse
Ratio Company Company
Tests of profitability:
Return on equity Correct!-» 18.91% 13.50% Correct!
Tests of liquidity:
Cash ratio Correct!-» 0.41 0.43 «- Correct!
Current ratio Correct!-» 1.80 1.88 «- Correct!
Quick ratio Correct!-» 0.80 1.06 «- Correct!
Receivable turnover Correct!-» 5.32 7.75 «- Correct!
Inventory turnover Correct!-» 2.50 9.48 «- Correct!
Solvency and equity position:
Market tests:
for the Year Ended December 31, 2007
Ratios
ARMSTRONG AND BLAIR COMPANIES
Price Waterhouse
Company Company
2012 2012
Balance Sheet
Cash 41,000$ 21,000$
Accounts receivable (net) 38,000 31,000
Inventory 99,000 40,000
Operational assets (net) 140,000 401,000
Other assets 84,000 305,000
Total assets 402,000$ 798,000$
Net income 45,000$ 93,000$
Selected data from 2011 statements
Accounts receivable (net) 18,000 38,000
Inventory 94,000 44,000
Long-term debt 60,000 48,000
Other data
Dividends declared and paid in 2012 33,000$ 148,000$
Given Data P14-05:
Total liability and stockholders’ equity 402,000$ 798,000$
Income Statement
Student Name:
Class:
Requirement 1:
2012 over 2011
Income Statement
Sales revenue 23,000$ 13.77% «- Correct!
Cost of goods sold 12,000 12.00% «- Correct!
Correct!
Balance Sheet
Cash (3,000)$ -42.86% «- Correct!
Accounts receivable (net) (4,000) -22.22% «- Correct!
Inventory 6,000 17.65% «- Correct!
Operational assets (net) 7,000 18.42% «- Correct!
Correct!
Requirement 2:
Working capital:
Current Assets:
Cash 4,000$ 7,000$
Accounts receivable (net) 14,000 18,000
Inventory 40,000 34,000
Total Current Assets 58,000 59,000
Current liabilities (no interest) 16,000 17,000
McGraw-Hill/Irwin
Instructor
Comparative Statements
PRINCE COMPANY
Problem 14-06
2012 2011
Income Statement
Sales revenue 190,000$ 167,000$
Cost of goods sold 112,000 100,000
Gross margin 78,000 67,000
Operating expenses and interest expense 56,000 53,000
Pretax income 22,000 14,000
Income tax 8,000 4,000
Net income 14,000$ 10,000$
Comparative Statements
PRINCE COMPANY
Given Data P14-06:
Balance Sheet
Dividend declared and paid 3,000$
Required:
1.
This workbook is organized as follows:
Sheet Name Contents
CP14-3 (this worksheet) CP14-3 Problem Requirements and Workbook Layout
Industry Ratio Report Industry Ratio Report
AEO Balance Sheets American Eagle Outfitters, Inc. Consolidated Balance Sheets
CP14-3 Comparing Companies within an Industry
Refer to the financial statements of American Eagle (Appendix B) and Urban Outfitters (Appendix C) and the Industry
Liquidity
Current Ratio 2.55
Company
Name
Ticker
Symbol
Quick Ratio 1.38 ANF
ARO
Activity AEO
Inventory
Turnover
5.92 ANN
Days to Sell
70.897 days BEBE
Payable
GES
Profitability JCG
Gross Profit
Margin
38.99% LTD
Profit Margin
Net Profit
Margin
Return on
Equity
Return on
Assets
Quality of
0.07 MW
The Men’s Warehouse Inc
The Buckle Inc
Ross Stores Inc
Pacific Sunwear of California Inc
Operating
6.24% JWN
Income
0.72 URBN
Leverage WTSLA
Times Interest
Earned
16.33
Interest
Coverage
16.39
Total
Debt/Total
1.08
Total
Assets/Total
1.92
Dividends
Dividend
Payout
19.61%
Dividend Yield 2.22%
Other
Sales
Sales Growth 2.39%
Capital
Acquisitions
1.93
Abercrombie & Fitch
J. Crew Group Inc
bebe stores Inc
Ann Taylor Stores
Guess? Inc
COMPANIES USED IN INDUSTRY ANALYSIS
American Eagle Outfitters
Aeropostale Inc
INDUSTRY RATIO REPORT
Retail Family Clothing Stores
Wet Seal Inc.
Urban Outfitters Inc
Nordstrom, Inc.
Limited Brands Inc
Inventory
Receivables
Turnover
54.24 CHS
Average
Collection
15.07 days PSS
Fixed Asset
Turnover
5.76 DBRN
Total Asset
Turnover
1.90 FL
Accounts
6.43 GPS
Collective Brands Inc
Chico’s FAS Inc
Gap Inc
Foot Locker, Inc
Dress Barn Inc.
January 31, February 2,
(in thousands, except per share amounts) 2009 2008
$ 473,342 $ 116,061
21,363 19,751
$ 1,963,676 $ 1,867,680
$ 152,068 $ 157,928
$ 75,000 $ –
29,417 49,494
64,695 62,161
6,259 22,803
42,299 54,554
13,726 12,953
18,299 16,285
401,763 376,178
88,314 70,355
Notes payable
Current portion of deferred lease credits
Unredeemed stored value cards and gift certificates
Accrued rent
Other liabilities and accrued expenses
Deferred lease credits
Accrued income and other taxes
Accrued compensation and payroll taxes
Total current liabilities
Non-current liabilities:
39,898 44,837
24,670 35,846
152,882 151,038
– –
$ 1,963,676 $ 1,867,680
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued and outstanding
LIABILITIES AND STOCKHOLDERS’ EQUITY
Non-current accrued income taxes
Commitments and contingencies
Other assets, net
Accounts payable
Current liabilities:
Total non-current liabilities
Other non-current liabilities
Total assets
Stockholders’ equity
AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
Cash and cash equivalents
Current assets:
10,511 503,878
294,928 286,485
41,471 31,920
59,660 35,486
45,447 47,004
925,359 1,020,834
740,240 625,568
10,706 11,479
251,007 165,810
15,001 24,238
Non-current deferred income taxes
Property and equipment, at cost, net of accumulated depreciation and amortization
Total current assets
Deferred income taxes
Prepaid expenses and other
Accounts and note receivable
Merchandise inventory
Short-term investments
January 1, February 2, February 3,
(In thousands, except per share amounts) 2009 2008 2007
Net sales $ 2,988,866 $ 3,055,419 $ 2,794,409
Other
income, net
17,790 37,626 42,277
Other-than-
temporary
22,889 – –
Income
before
297,041 636,381 629,067
Provision for
income
117,980 236,362 241,708
Net income $ 179,061 $ 400,019 $ 387,359
Basic
income per
Diluted
income per
For the Years Ended
AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Gross profit 1,174,101 1,423,138 1,340,429
740,742 715,180 665,606
Depreciation
131,219 109,203 88,033
CP14-3
Home
January 1, February 2, February 3,
(In thousands) 2009 2008 2007
$ 179,061 $ 400,019 $ 387,359
197 242 356
(378) 947 (191)
– – (177)
– – 878
(49,874) 13,771 (314)
Comprehensive income
Other comprehensive (loss) income
Reclassification adjustment for foreign currenty loss reasinzed in net
income realted to the disposition of National Logistics Services
the sale of available-for-sale securities, net of tax
AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended
Net income
Other comprehensive (loss) income:
transfer of investment securities from available-for-sale classification
Reclassification adjustment for gain realized in net income realted to the
Unrealized (loss) gain on investments, net of tax
to trading classification, net of tax
related to ARS
Reclassification adjustment for OTTI charges realized in net income
Reclassification adjustment for losses realized in net income due to
Accumulated
Shares Deferred Other
Outstanding Common Contributed Retained Treasury Compensation Comprehensive Stockholders’
(1) Stock Capital Earnings Stock (2) Expense Income (loss) Equity
221,897 $ 2,416 $ 369,807 $ 978,855 $ (216,513) $ (1,041) $ 22,028 $ 1,155,552
4,556 45 83,615 – – 1,041 – 84,701
(5,250) – – (146,485) – – (146,485)
221,284 2,461 453,418 1,302,345 (362,626) – 21,714 1,417,312
– – – (13,304) – (13,304)
221,284 2,461 453,418 1,289,041 (362,626) – 21,714 1,404,008
1,092 20 39,977 – – – – 39,997
(18,750) – – – (438,291) – – (438,291)
(415) – – – (12,310) – – (12,310)
1,269 – – (6,480) 20,546 – – 14,066
204,480 2,481 493,395 1,601,784 (792,681) – 35,485 1,340,464
453 4 20,179 420 – – – 20,603
Stock awards
Net income
Repurchase of common stock from employees
of publicly announced programs
Balance at February 2, 2008
Cash dividends ($0.98 per share)
Other comprehensive income, net of tax
Repurchase of common stock as part
Stock awards
(164) – – – (3,432) – – (3,432)
512 – – (4,710) 9,313 – – 4,603
– – – 179,061 – – – 179,061
– – – – – – (49,874) (49,874)
Cash dividends ($0.40 per share)
Repurchase of common stock from employees
Reissuance of treasury stock
Other comprehensive loss, net of tax
Net income
announced programs
Repurchase of common stock as part of publicly
Stock awards
Adoption of FIN 48
Balance at February 3, 2007
Balance at February 4, 2007
AMERICAN EAGLE OUTFITTERS, INC.
Balance at January 31, 2006
(in thousands, except per share amounts)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(4) – (113) – – – – (113)
528 – 109 (2,348) 8,007 – – 5,768
Other comprehensive loss, net of tax
Net income
stock split
Cash paid for fractional shares in three-for-two
Cash dividends ($0.28 per share)
Reissuance of treasury stock
January 31, February 2, February 3,
(In thousands) 2009 2008 2007
Operating activities:
Net income
$ 179,061 $ 400,019 $ 387,359
Adjustments to reconcile income to net cash provided by operating activities:
Depreciation and amortization
133,141 110,753 89,698
Stock-based compensation
20,296 33,670 36,556
Prepaid expenses and other
(24,781) (1,334) (4,204)
Other assets, net
390 (3,242) (5,357)
Accounts payable
(3,053) (15,559) 32,345
Unredeemed gift cards and gift certificates
(11,392) (699) 11,623
Deferred lease credits
18,887 4,640 7,791
(20,697) (31,416) 43,482
(19,188) (2,598) 33,047
123,132 64,251 361,909
302,193 464,270 749,268
(265,335) (250,407) (225,939)
– – 12,345
(48,655) (1,772,653) (1,353,339)
393,559 2,126,891 915,952
(1,180) (1,170) (140)
Net cash provided by (used for) investing activities
78,389 102,661 (651,121)
Financing activities:
Payments on note payable and capital leases
(2,177) (1,912) (3,020)
Proceeds from issuance of note payable
75,000 – 2,025
Repurchase of common stock as part of publicly announced programs
– (438,291) (146,485)
(3,432) (12,310) (7,635)
– – (113)
3,799 13,183 28,447
693 6,156 19,541
(82,394) (80,796) (61,521)
(8,511) (513,970) (168,761)
(14,790) 3,363 (178)
357,281 56,324 (70,792)
116,061 59,737 130,529
Cash and cash equivalents – end of period
AMERICAN EAGLE OUTFITTERS, INC.
For the Years Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS
24,469 (8,147) (27,572)
1,121 7,260 25,465
(693) (6,156) (19,541)
(1,141) 1,221 687
6,713 592 –
22,889 – –
(13,735) (19,074) (53,527)
(10,094) (5,660) 7,448
2009 2008
$ 316,035 $ 49,912
49,948 141,883
Accrued compensation
Accrued expenses and other current liabilities
Accounts payable
Retained earnings
505,407 299,291
155,226 64,748
43,974 19,983
1,329,009$ 769,205$
none issued – –
167,712,088 and 166,104,615 issued and outstanding respectively 17 16
170,166 134,146
Total Assets
Additional paid-in capital
Marketable securities
Preferred shares; $.0001 par value, 10,000,000 shares authorized,
Common shares; $.0001 par value, 200,000,000 shares authorized,
Property and equipment, net
Marketable securities
Deferred income taxes and other assets
(in thousands, except share and per share data)
Consolidated Balance Sheets
URBAN OUTFITTERS, INC.
Current Assets:
Cash and cash equivalents
January 31,
ASSETS
Accounts receivable, net of allowance for doubtful accounts of $1,229
Prepaid expenses and other current assets
Deferred taxes
2009 2008 2007
Net sales 1,834,618$ 1,507,724$ 1,224,717$
Cost of sales, including certain buying, distribution
and occupancy costs 1,121,140 930,952 772,796
Gross profit 713,478 576,772 451,921
Selling, general and administrative expenses 414,043 351,827 287,932
Income from operations 299,435 224,945 163,989
Basic 1.20$ 0.97$ 0.71$
Diluted 1.17$ 0.94$ 0.69$
Weighted average common shares outstanding:
Basic 166,793,062 165,305,207 164,679,786
Diluted 170,860,605 169,640,585 168,652,005
Consolidated Statements of Income
URBAN OUTFITTERS, INC.
Fiscal Year Ended January 31,
(in thousands, except share and per share data)
Interest income 11,504 9,390 6,531
Other income 694 575 353
Other expenses (2,143) (515) (715)
Income before income tax expense 309,490 234,395 170,158
Income tax expense 110,126 74,164 53,952
Net income per common share:
Accumulated
Additional Other
Comprehensive Number of Par Paid-in Unearned Retained Comprehensive
Income Shares Value Capital Compensation Earnings Income (loss) Total
Balances as of February 1, 2006 164,831,477 16$ 138,050$ (3,905)$ 426,190$ 528$ 560,880$
Net Income 116,206$ – – – – 116,206 – 116,206
Foreign currency translation 3,614 – – – – – 3,614 3,614
Unrealized losses on marketable securities,
net of tax 142 – – – – – 142 142
Comprehensive income 119,962$
Share-based compensation – – 3,497 – – 3,497
Unearned compensation reclass – – (3,905) 3,905 – – –
Share-based compensation – – 3,277 – – – 3,277
Exercise of stock options 1,117,152 – 5,000 – – – 5,000
Tax effect of share exercises – – 7,341 – – – 7,341
Balances as of January 31, 2008 166,104,615 17 144,204 – 701,975 7,235 853,431
Net income 199,364 – – – – 199,364 – 199,364
Foreign currency translation (19,866) – – – – – (19,866) (19,866)
Unrealized losses on marketable securities,
net of tax (5,116) – – – – – (5,116) (5,116)
Comprehensive income 174,382$
Share-based compensation – – 3,637 – – – 3,637
Exercise of stock options 1,607,473 – 8,891 – – – 8,891
Tax effect of share exercises – – 13,434 – – – 13,434
Balances as of January 31, 2009 167,712,088 17$ 170,166$ –$ 901,339$ (17,747)$ 1,053,775$
Consolidated Statements of Shareholders’ Equity
URBAN OUTFITTERS, INC.
(in thousands, except share data)
Common Shares
Exercise of stock options 1,375,986 1 6,350 – – – 6,351
Tax effect of share exercises – 5,394 5,394
Share Repurchase (1,220,000) – (20,801) – – – (20,801)
Balances as of January 31, 2007 164,987,463 17 128,586 – 542,396 4,284 675,283
Net income 160,231 – – – – 160,231 – 160,231
Foreign currency translation 703 – – – – – 703 703
FIN48 adjustment – (652) (652)
Unrealized gains on marketable securities,
net of tax 2,248 – – – – – 2,248 2,248
Comprehensive income 163,182$
2009 2008 2007
Cash flows from operating activities:
Net income 199,364$ 160,231$ 116,206$
Accounts payable, accrued expenses and other liabilities (8,868) 75,967 33,600
Net cash provided by operating activities 251,570 254,353 187,117
Cash flows from investing activities:
Cash flows from financing activities:
Exercise of stock options 8,891 5,000 6,351
Excess tax benefit of stock options exercises 13,434 7,341 5,394
Share repurchases – – (20,801)
Net cash provided by (used in) financing activities 22,325 12,341 (9,056)
Effect of exchange rate changes on cash and cash equivalents (6,224) 212 702
Increase (decrease) in cash and cash equivalents 210,764 78,004 (22,645)
Cash and cash equivalents at beginning of period 105,271 27,267 49,912
Cash and cash equivalents at end of period 316,035$ 105,271$ 27,267$
Supplemental cash flow information:
Cash paid during the year for:
Income taxes 115,040$ 70,765$ 52,535$
Non-cash investing activities – Accrued capital expenditures 6,561$ 6,645$ 14,618$
Cash paid for property and equipment (112,553) (115,370) (212,029)
Cash paid for marketable securities (809,039) (293,633) (182,653)
(in thousands)
Consolidated Statements of Cash Flows
URBAN OUTFITTERS, INC.
Fiscal Year Ended January 31,
Adjustments to reconcile net income to net cash provided by operating activities: