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

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Financial information for American Eagle is presented in Appendix A at the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book.


Required:
1. Which company carries a greater inventory balance as a percentage of total assets?
2. Which company has a higher inventory turnover ratio and therefore lower average days in inventory?
3. Which company’s operations are more profitable using the gross profit ratio?
4. Considering the companies’ ratio of operating expenses to net sales, does your answer to requirement 3 change? Explain.

Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally.    Inventory Turnover Ratio FormulaWhere,...
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Financial Accounting

ISBN: 978-1259914898

5th edition

Authors: David Spiceland, Wayne M. Thomas, Don Herrmann

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