Abercrombie & Fitch Co. (ANF) and The Gap, Inc. (GPS) are two U.S. apparel retailers. The current assets and current liabilities for each company from recent balance sheets are as follows (in thousands): Abercrombie & Fitch The Gap Current assets: Cash $823,139 $877,000 Accounts receivable Inventories 69,102 525,864 3,018,000 Other current assets 89,654 1,270,000 Total current assets $1,507,759 $5,165,000 Current liabilities: Accounts payable $374,829 $1,951,000 Other current liabilities Total current liabilities 640,411 $1,015,240 2,126,000 $4,077,000 Required: a. Compute the working capital for each company. Abercrombie: $ 492,519 thousand thousand The Gap: $1,088,000 b. Compute the current ratio for each company. Round your answers to one decimal place. Abercrombie: The Gap: 1.5 1.3 ✓ c. Compute the quick ratio for each company. Round your answers to one decimal place. Abercrombie: The Gap: d. Which company appears to have the greater short-term liquidity? Why?
Abercrombie & Fitch Co. (ANF) and The Gap, Inc. (GPS) are two U.S. apparel retailers. The current assets and current liabilities for each company from recent balance sheets are as follows (in thousands): Abercrombie & Fitch The Gap Current assets: Cash $823,139 $877,000 Accounts receivable Inventories 69,102 525,864 3,018,000 Other current assets 89,654 1,270,000 Total current assets $1,507,759 $5,165,000 Current liabilities: Accounts payable $374,829 $1,951,000 Other current liabilities Total current liabilities 640,411 $1,015,240 2,126,000 $4,077,000 Required: a. Compute the working capital for each company. Abercrombie: $ 492,519 thousand thousand The Gap: $1,088,000 b. Compute the current ratio for each company. Round your answers to one decimal place. Abercrombie: The Gap: 1.5 1.3 ✓ c. Compute the quick ratio for each company. Round your answers to one decimal place. Abercrombie: The Gap: d. Which company appears to have the greater short-term liquidity? Why?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Analyze and compare Abercrombie & Fitch and The Gap
Abercrombie & Fitch Co. (ANF) and The Gap, Inc. (GPS) are two U.S. apparel retailers. The current assets and current liabilities for each company from recent balance sheets are as follows (in thousands):
Abercrombie
Current assets:
Cash
Accounts receivable
Inventories
Other current assets
Total current assets
Current liabilities:
Accounts payable
Other current liabilities
Total current liabilities
& Fitch
The Gap
$823,139
$877,000
69,102
525,864
3,018,000
89,654
1,270,000
$1,507,759
$5,165,000
$374,829
640,411
$1,015,240
$1,951,000
2,126,000
$4,077,000
Required:
a. Compute the working capital for each company.
492,519 thousand
Abercrombie: $
The Gap: $
1,088,000
thousand
b. Compute the current ratio for each company. Round your answers to one decimal place.
Abercrombie:
1.5
The Gap:
1.3
c. Compute the quick ratio for each company. Round your answers to one decimal place.
Abercrombie:
The Gap:
x
d. Which company appears to have the greater short-term liquidity? Why?
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