Chapter 3, Problem 3.3CP

Comparing Companies within an Industry

Refer to the financial statements of American Eagle Outfitters in Appendix B, Urban Outfitters in Appendix C, and the Industry Ratio Report in Appendix D at the end of this hook.

Required:

1. 1. By w hat title does each company call its income statement? Explain what “Consolidated” means.
2. 2. Which company hail higher net income for the fiscal year?
3. 3. Compute the net profit margin ratio for both companies for the year. Which company is managing revenues and expenses more effectively?
4. 4. Compare the net profit margin ratio for both companies for the most recent year presented to the industry average. On average, are these two companies managing sales and expenses better or worse than their competitors?
5. 5. How much cash was provided by operating activities for each year by each company? What was the percentage change in operating cash flows (1) from fiscal year ended 2013 to 2014 and (2) from fiscal year ended 2014 to 2015? (Hint: Percentage Change = (Current Year Amount − Prior Year Amount) ÷ Prior Year Amount.)