Determine D’s free cash flow for both years.

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Answer 1

Question

Chapter 16, Problem 8PEB

a.

To determine

Determine D’s free cash flow for both years.

b.

To determine

Explain whether free cash flow has improved or declined from Year 1 to Year 2.

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Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's expenses, Gross margin, and Net income?

Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?

Answer 2

Question

Chapter 16, Problem 8PEB

a.

To determine

Determine D’s free cash flow for both years.

b.

To determine

Explain whether free cash flow has improved or declined from Year 1 to Year 2.

Expert Solution & Answer

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Answer 3

Question

Chapter 16, Problem 8PEB

a.

To determine

Determine D’s free cash flow for both years.

b.

To determine

Explain whether free cash flow has improved or declined from Year 1 to Year 2.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 16, Problem 8PEB

a.

To determine

Determine D’s free cash flow for both years.

b.

To determine

Explain whether free cash flow has improved or declined from Year 1 to Year 2.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 16, Problem 8PEB

a.

To determine

Determine D’s free cash flow for both years.

b.

To determine

Explain whether free cash flow has improved or declined from Year 1 to Year 2.

Answer 6

Chapter 16, Problem 8PEB

a.

To determine

Determine D’s free cash flow for both years.

Answer 7

Chapter 16, Problem 8PEB

a.

To determine

Determine D’s free cash flow for both years.

Answer 8

b.

To determine

Explain whether free cash flow has improved or declined from Year 1 to Year 2.

Answer 9

b.

To determine

Explain whether free cash flow has improved or declined from Year 1 to Year 2.

Answer 10

Expert Solution & Answer

Answer 11

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Answer 12

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Answer 13

Ch. 16 - Prob. 1DQ Ch. 16 - Prob. 2DQ Ch. 16 - A corporation issued 2,000,000 of common stock in...Ch. 16 - A retail business, using the accrual method of...Ch. 16 - If salaries payable was 100,000 at the beginning...Ch. 16 - Prob. 6DQ Ch. 16 - A corporation issued 2,000,000 of 20-year bonds...Ch. 16 - Fully depreciated equipment costing 50,000 is...Ch. 16 - Prob. 9DQ Ch. 16 - Prob. 10DQ

Determine D’s free cash flow for both years.

Solution Summary: The author calculates D's free cash flow for both years. It is defined as an evaluation of financial performance of a company.

Determine D’s free cash flow for both years.

Explain whether free cash flow has improved or declined from Year 1 to Year 2.

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Chapter 16 Solutions