Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Textbook Question
Chapter 4, Problem 3MAD
Analyze and compare Foot Locker and The Finish Line
The Foot Locker, Inc. (FL) and The Finish Line, Inc. (FINL) are two retail athletic footwear chains. The current assets and current liabilities from recent
- a. Compute the
working capital for Year 2 and Year 1 for each company. - b. Compute the
current ratio for Year 2 and Year 1 for each company. Round to one decimal place. - c. If you were a supplier to these two companies, in which company would you feel most confident about receiving payment?
- d. For each company, did liquidity improve or decline between the two years?
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c. Compute the quick ratio for each company. Round your answers to one decimal place.
Abercrombie:
The Gap:
Current assets:
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):
Cash
Accounts receivable
Inventories
X
Other current assets
Total current assets
Current liabilities:
Accounts payable
Other current liabilities
Total current liabilities
X
Abercrombie
& Fitch
The Gap
$723,135 $1,364,000
73,112
290,000
437,879
2,156,000
101,824
706,000
$1,335,950
$4,516,000
$226,878
332,039
$558,917
$1,174,000
2,035,000
$3,209,000
Hasbro, Inc. and Mattel, Inc. are the two largest toy companies in North America. Condensed liabilities and stockholders’ equity from a recent balance sheet are shown for each company as follows (in thousands):
Please see the attachment for details:
a. Determine the ratio of liabilities to stockholders’ equity for both companies. Round toone decimal place.b. Determine the times interest earned ratio for both companies. Round to one decimalplace.c. Interpret the ratio differences between the two companies.
Calculate the current ratio for each of the following companies (round the ratio to two decimals). Identify the company with the strongest liquidity position. (These companies are competitors in the same industry.)
Chapter 4 Solutions
Financial And Managerial Accounting
Ch. 4 - Why do some accountants prepare an end-of-period...Ch. 4 - Describe the nature of the assets that compose the...Ch. 4 - Prob. 3DQCh. 4 - Prob. 4DQCh. 4 - Why are closing entries required at the end of an...Ch. 4 - Prob. 6DQCh. 4 - What is the purpose of the post-closing trial...Ch. 4 - Prob. 8DQCh. 4 - Which step of the accounting cycle is optional?Ch. 4 - Prob. 10DQ
Ch. 4 - Flow of accounts into financial statements The...Ch. 4 - Prob. 2BECh. 4 - Classified balance sheet The following accounts...Ch. 4 - Closing entries After the accounts have been...Ch. 4 - Accounting cycle From the following list of steps...Ch. 4 - Working capital and current ratio Current assets...Ch. 4 - Flow of accounts into financial statements The...Ch. 4 - Classifying accounts Balances for each of the...Ch. 4 - Financial statements from the end-of-period...Ch. 4 - Financial statements from the end-of-period...Ch. 4 - Income statement The following account balances...Ch. 4 - Income statement; net loss The following revenue...Ch. 4 - Income statement FedEx Corporation (FDX) had the...Ch. 4 - Statement of stockholders equity Climate Control...Ch. 4 - Statement of stockholders equity; net loss...Ch. 4 - Classifying assets Identify each of the following...Ch. 4 - Balance sheet classification At the balance sheet...Ch. 4 - Balance sheet Dynamic Weight Loss Co. offers...Ch. 4 - Balance sheet The following balance sheet was...Ch. 4 - Identifying accounts to be closed From the list...Ch. 4 - Closing entries with net income Automation...Ch. 4 - Closing entries with net loss Summit Services Co....Ch. 4 - Identifying permanent accounts Which of the...Ch. 4 - Post-closing trial balance An accountant prepared...Ch. 4 - Steps in the accounting cycle Rearrange the...Ch. 4 - Completing an end-of-period spreadsheet List (a)...Ch. 4 - Appendix 1 Adjustment data on an end-of-period...Ch. 4 - Prob. 22ECh. 4 - Appendix 1 Financial statements from an...Ch. 4 - Appendix 1 Adjusting entries from an end-of-period...Ch. 4 - Prob. 25ECh. 4 - Reversing entry The following adjusting entry for...Ch. 4 - Adjusting and reversing entries On the basis of...Ch. 4 - Adjusting and reversing entries On the basis of...Ch. 4 - Entries posted to wages expense account Portions...Ch. 4 - Entries posted to wages expense account Portions...Ch. 4 - Financial statements and closing entries Beacons...Ch. 4 - Financial statements and closing entries Foxy...Ch. 4 - T accounts, adjusting entries, financial...Ch. 4 - Ledger accounts, adjusting entries, financial...Ch. 4 - Complete accounting cycle For the past several...Ch. 4 - Financial statements and closing entries Last...Ch. 4 - Financial statements and closing entries The...Ch. 4 - T accounts, adjusting entries, financial...Ch. 4 - Ledger accounts, adjusting entries, financial...Ch. 4 - Complete accounting cycle For the past several...Ch. 4 - The unadjusted trial balance of PS Music as of...Ch. 4 - Kelly Pitney began her consulting business, Kelly...Ch. 4 - Analyze and compare Amazon.com to Best Buy...Ch. 4 - Analyze and compare Zynga, Electronic Arts, and...Ch. 4 - Analyze and compare Foot Locker and The Finish...Ch. 4 - Analyze Under Armour The following year-end data...Ch. 4 - Prob. 5MADCh. 4 - Analyze and compare Alphabet (Google) and...Ch. 4 - Prob. 1TIFCh. 4 - Your friend, Daniel Nat, recently began work as...Ch. 4 - Prob. 4TIFCh. 4 - Prob. 5TIF
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- Hasbro, Inc. (HAS), and Mattel, Inc. (MAT), are the two largest toy companies in North America. Condensed liabilities and stockholders equity from a recent balance sheet are shown for each company as follows (in thousands): The operating income and interest expense from the income statement for each company were as follows (in thousands): a. Determine the ratio of liabilities to stockholders equity for both companies. Round to one decimal place. b. Determine the times interest earned ratio for both companies. Round to one decimal place. c. Interpret the ratio differences between the two companies.arrow_forwardRecent balance sheet information for two companies in the food industry, Mondelez International, Inc. (MDLZ), and The Hershey Company (HSY), is as follows (in thousands): a. Determine the ratio of liabilities to stockholders equity for both companies. Round to one decimal place. b. Determine the ratio of fixed assets to long-term liabilities for both companies. Round to one decimal place. C. Interpret the ratio differences between the two companies.arrow_forwardComparing Two Companies in the Same Industry: Chipotle and Panera Bread Refer to the financial information for Chipotle and Panera Bread reproduced at the end of this book and answer the following questions: Required What is the dollar amount of inventories that each company reports on its balance sheet at the end of the most recent year? What percentage of total assets do inventories represent for each company? What does this tell you about the nature of their business? Refer to Note 1 in Chipotles annual report. What inventory valuation method does the company use? Refer to Note 2 in Panera Breads annual report. What inventory valuation method does the company use? How do both companies deal with situations in which the market value of inventory is less than its cost? Given the nature of their businesses, which inventory system, periodic or perpetual, would you expect both Chipotle and Panera Bread to use? Explain your answer.arrow_forward
- Comparing Two Companies in the Same Industry: Chipotle and Panera Bread Refer to the financial information for Chipotle and Panera Bread reproduced at the back of the book and answer the following questions. What was the total revenue for each company for the most recent year? By what percentage did each companys revenue increase or decrease from its total amount in the prior year? What was each companys net income for the most recent year? By what percentage did each companys net income increase or decrease from its net income for the prior year? What was the total asset balance for each company at the end of its most recent year? Among its assets, what was the largest asset each company reported on its year-end balance sheet? Did either company pay its stockholders any dividends during the most recent year? Explain how you can tell.arrow_forwardGrammatico Company has just completed its third year of operations. The income statement is as follows: Selected information from the balance sheet is as follows: Required: Note: Round answers to two decimal places. 1. Compute the times-interest-earned ratio. 2. Compute the debt ratio. 3. CONCEPTUAL CONNECTION Assume that the lower quartile, median, and upper quartile values for debt and times-interest-earned ratios in Grammaticos industry are as follows: How does Grammatico compare with the industrial norms? Does it have too much debt?arrow_forwardcalculate the quick assets (in $) and acid test ratio for the given company. round ratios to the nearest hundredth.arrow_forward
- Prepare a common-size balance for the current and past year, for both companies. Use cell referencing to calculate the common size percentages and round to two decimal places. Columns have been set up for you to enter your work. and answer the questions at the end.arrow_forwardHighlight the data in column B, the 2nd column next to year column., the Revenue ($m) data. Then create a Column Chart illustrating the Revenue ($m) data. Year Revenue ($ million) IVA ($ million) Establishments (Units) Enterprises (Units) Employment (Units) Wages ($ million) Corporate profits ($ billion) 2002 19429.1 11352.6 16633.0 15452.0 349652.0 10095.2 1124.9 2003 19200.9 11385.2 16638.0 15413.0 395140.0 10086.6 1279.5 2004 19787.6 12425.6 16932.0 15686.0 403789.0 11088.0 1520.9 2005 20294.5 12541.8 16835.0 15649.0 394396.0 11162.6 1703.0 2006 21337.1 13678.0 19024.0 17841.0 397106.0 11687.3 1827.9 2007 21578.0 14071.1 24087.0 22741.0 404551.0 12266.9 1657.8 2008 21953.0 12777.7 23113.0 21907.0 446480.0 11543.4 1363.7 2009 21737.9 12508.1 22827.0 21598.0 449850.0 11430.2 1459.8 2010 20628.1 13236.7 22578.0 21368.0 412348.0 11881.0 1798.8 2011 21082.2 13314.9 22817.0 21619.0 422687.0 12200.7 1844.6 2012 22140.3 14792.9 24514.0 23280.0 454038.0 13202.2…arrow_forwardThe following information was drawn from the balance sheets of the Kansas and Montana companies. Kansas Montana $42,000 21,000 $55,000 11,000 Current assets Current liabilities Required a. Compute the current ratio for each company. b. Which company has the greater likelihood of being able to pay its bills? c. Assume that both companies have the same amount of total assets. Speculate as to which company would produce the higher return-on-assets ratio. Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the current ratio for each company. (Round your answers to 2 decimal places.) Current Ratio Kansas to 1 Montana to 1arrow_forward
- Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 500,000 shares of common stock were outstanding. The interest rate on the bonds, which were sold at their face value, was 10%. The income tax rate was 40% and the dividend per share of common stock was $1.00 last year and $0.65 this year. The market value of the company's common stock at the end of the year was $29. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: $ 1,230 9,200 13,200 $ 1,290 8,.400 Cash Accounts receivable, net Inventory Prepaid expenses 11,800 690 770 Total current assets 24,400 22,180 Property and equipment: Land 9,100 45,013 9,100 41,444 Buildings and equipment, net Total property and equipment 54,113 50,544 Total assets $78,513 $72,724 Liabilities and…arrow_forwardPlease help with both. Thank you :)arrow_forwardRefer to the 10-K for Abercrombie & Fitch. Required: 1. What does the company report for the following accounts for the most current fiscal year: Enter your answer in thousands. a. Cash b. Short-term investments (or marketable securities) c. Accounts receivable d. Inventory e. Other current assets f. Accounts payable g. Other current liabilities h. Cash flow from operations A A AA A A 好 2. The company projects the following to occur in the next fiscal year: • Accounts payable will decrease by 25%. • Other current liabilities are expected to increase by 33%. • Cash flow from operations is expected to decrease by 32%. Assume all other items remain unchanged from the prior year. Provide the next year's forecasted balances for the following accounts and cash flow from operations.arrow_forward
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Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License