Analyze and compare Abercrombie & Fitch and The GapAbercrombie & 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):AbercrombieCurrent assets:CashAccounts receivableInventoriesOther current assetsTotal current assetsCurrent liabilities:Accounts payableOther current liabilitiesTotal current liabilities& FitchThe Gap$823,139$877,00069,102525,8643,018,00089,6541,270,000$1,507,759$5,165,000$374,829640,411$1,015,240$1,951,0002,126,000$4,077,000Required:a. Compute the working capital for each company.492,519 thousandAbercrombie: $The Gap: $1,088,000thousandb. Compute the current ratio for each company. Round your answers to one decimal place.Abercrombie:1.5The Gap:1.3c. Compute the quick ratio for each company. Round your answers to one decimal place.Abercrombie:The Gap:xd. Which company appears to have the greater short-term liquidity? Why?

Current ratio is the measure that helps the entity in determining its liquidity position. It is…

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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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