Refer to the financial statements of Abercrombie & Fitch and Aeropostale that are supplied with this text.
Required:
1. What method of computing net cash flow from operating activities did Abercrombie & Fitch use? What method of computing net cash flow from operating activities did Aeropostale use?
Would you expect these to be the same? Why or why not?
2. Find net cash provided by operating activities for each company:
a. What was the amount of cash provided by operating activities for the year ending January 30, 2010 (fiscal 2009) for Abercrombie & Fitch? What was the amount of cash provided by operating activities for the year ending January 30, 2010, for Aeropostale?
b. What was the most significant adjustment that caused a difference between net income and net cash provided by operating activities?
c. Comparing net income to net cash provided by operating activities, can you draw any conclusions as to the quality of each company’s earnings?
3. Refer to each company’s investing and financing activities. What were some of the more significant uses of cash? What were some of the more significant sources of cash?
4. Does each company match the time commitments of inflows and outflows of cash well?
5. Are debt and equity likely to be available as inflows of cash in the near future?