Chapter 3, Problem 3.4CP

Analyzing a Company over Time

Refer to the annual report for American Eagle Outfitters in Appendix B.

Required:

1. 1. The annual report or 10-K report for American Eagle Outfitters provides selected financial data for the last five years. Compute the net profit margin ratio for each of the years presented. Use income from continuing operations in place of net income. (Hint: See Item 6 from the 10-K. which is disclosed within the annual report for the data.) Note: Some companies will label a year that has a January year-end as having a fiscal year-end dated one year earlier. For example, a January 2015 year-end may be labeled as Fiscal 2014 since the year actually has more months that fall in the 2014 calendar year than in the 2015 calendar year.
2. 2. In Chapter 2. we discussed the current ratio. This ratio is computed in Item 6. Observe the trends over time for both the net profit margin and the current ratio. What do they suggest about American Eagle Outfitters?