Chapter 5, Problem 5.2APFA

American Eagle Outfitters, Inc.

Financial information for American Eagle is presented in Appendix A at the end of the book.

Required:

  1.    Determine whether the trend in net sales has been increasing or decreasing for the past three years.

  2.    Where is accounts receivable reported? Explain why using net sales to calculate the receivables turnover ratio might not be a good indicator of a company’s ability to efficiently manage receivables for a retail company like American Eagle, which typically sells clothing for cash.

  3.    Does American Eagle report an allowance for uncollectible accounts in the balance sheet? If so, how much is reported for the most recent year?