Compute the inventory turnover, days’ sales in inventory, and gross profit percentage

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Answer 1

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Chapter D, Problem 7SE

1.

To determine

Compute the inventory turnover, days’ sales in inventory, and gross profit percentage

2.

To determine

Compute the days’ sales in receivables, and gross profit percentage

3.

To determine

State the ability of the company to sell inventory and collect receivables.

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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?

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Answer 2

Question

Chapter D, Problem 7SE

1.

To determine

Compute the inventory turnover, days’ sales in inventory, and gross profit percentage

2.

To determine

Compute the days’ sales in receivables, and gross profit percentage

3.

To determine

State the ability of the company to sell inventory and collect receivables.

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Answer 3

Question

Chapter D, Problem 7SE

1.

To determine

Compute the inventory turnover, days’ sales in inventory, and gross profit percentage

2.

To determine

Compute the days’ sales in receivables, and gross profit percentage

3.

To determine

State the ability of the company to sell inventory and collect receivables.

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Answer 4

Question

Chapter D, Problem 7SE

1.

To determine

Compute the inventory turnover, days’ sales in inventory, and gross profit percentage

2.

To determine

Compute the days’ sales in receivables, and gross profit percentage

3.

To determine

State the ability of the company to sell inventory and collect receivables.

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Answer 5

Chapter D, Problem 7SE

1.

To determine

Compute the inventory turnover, days’ sales in inventory, and gross profit percentage

2.

To determine

Compute the days’ sales in receivables, and gross profit percentage

3.

To determine

State the ability of the company to sell inventory and collect receivables.

Answer 6

Chapter D, Problem 7SE

1.

To determine

Compute the inventory turnover, days’ sales in inventory, and gross profit percentage

Answer 7

Chapter D, Problem 7SE

1.

To determine

Compute the inventory turnover, days’ sales in inventory, and gross profit percentage

Answer 8

2.

To determine

Compute the days’ sales in receivables, and gross profit percentage

Answer 9

2.

To determine

Compute the days’ sales in receivables, and gross profit percentage

Answer 10

3.

To determine

State the ability of the company to sell inventory and collect receivables.

Answer 11

3.

To determine

State the ability of the company to sell inventory and collect receivables.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. D - Prob. 1TI Ch. D - Prob. 2TI Ch. D - Prob. 3TI Ch. D - Prob. 4TI Ch. D - Prob. 5TI Ch. D - Prob. 6TI Ch. D - Prob. 7TI Ch. D - Prob. 8TI Ch. D - Prob. 9TI Ch. D - Prob. 10TI

Compute the inventory turnover, days’ sales in inventory, and gross profit percentage

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Compute the inventory turnover, days’ sales in inventory, and gross profit percentage

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State the ability of the company to sell inventory and collect receivables.

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