1. Determine the inventory balance as a percentage of total assets for American Eagle and Buckle. Round to the nearest two decimal places.

Check my work Financial information for American Eagle is presented in Appendix At the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book Required: 1. Determine the inventory balance as a percentage of total assets for American Eagle and Buckle? Total Assets American Eagle Buckle 2. Which company has a higher inventory turnover ratio and therefore lower average days in inventory? American Eagle Buckle 3. Which company's operations are more profitable using the gross profit ratio? American Eagle Buckle 4. Considering the companies' ratio of operating expenses (other than cost of goods sold to net sales, does your answer to Requirement 3 change? Yes O No A-4 APPENDIX A American Eagle Outfitters, Inc., 2017 Annual Report AMERICAN EAGLE OUTFITTERS, INC. Consolidated Balance Sheets January 28, February 3, 2018 2017 $ $ (In thousands, except per share amounts) Assets Current assets: Cash and cash equivalents Merchandise inventory Accounts receivable, net Prepaid expenses and other Total current assets Property and equipment, net of accumulated depreciation Intangible assets, net of accumulated amortization Goodwill Deferred income taxes Other assets Total assets 413,613 398,213 78,304 78,400 968,530 724,239 46,666 15,070 9,344 52,464 1,816,313 378,613 358,446 86,634 77,536 901.229 707,797 49,373 14,887 49,250 60,124 1,782,660 $ $ $ $ 236,703 54,324 83,312 12,781 52,347 11,203 34,551 485,221 246,204 54,184 78,619 12,220 52,966 12,780 36,810 493,783 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued compensation and payroll taxes Accrued rent Accrued income and other taxes Unredeemed gift cards and gift certificates Current portion of deferred lease credits Other liabilities and accrued expenses Total current liabilities Non-current liabilities: Deferred lease credits Non-current accrued income taxes Other non-current liabilities Total non-current liabilities Commitments and contingencies Stockholders' equity Preferred stock, $0.01 par value; 5,000 shares authorized: none issued and outstanding Common stock, $0.01 par value, 600,000 shares authorized; 249,566 shares issued: 177,316 and 181,886 shares outstanding, respectively Contributed capital Accumulated other comprehensive loss, net of tax Retained earnings Treasury stock, 72,250 and 67,680 shares, respectively, at cost Total stockholders' equity Total liabilities and stockholders' equity 47,977 7,269 29,055 84,301 45,114 4,537 34,657 84,308 2,496 593,770 (30,795) 1,883,592 (1,202,272) 1 246,791 1,816,313 2,496 603,890 (36,462) 1,775,775 (1,141,130) 1,204,569 1,782,660 $ Refer to Notes to Consolidated Financial Statements A-5 APPENDIX A American Eagle Outfitters, Inc., 2017 Annual Report AMERICAN EAGLE OUTFITTERS, INC. Consolidated Statements of Operations February 3, 2018 3,795,549 For the Years Ended January 28 2017 $ 3,609,865 January 30. 2016 3,521,848 $ $ (In thousands, except per share amounts) Total net revenue Cost of sales, including certain buying, occupancy and warehousing expenses Gross profit Selling, general and administrative expenses Impairment and restructuring charges Depreciation and amortization expense Operating income Other (expense) income, net Income before income taxes W Provision for income taxes Income from continuing operations Discontinued operations, net of tax Net income 2.425,044 1,370,505 879,685 20,611 167,421 302,788 (15,615) 287,173 83,010 204,163 2,242,938 1,366,927 857,562 21,166 156,723 331,476 3,786 335,262 122,813 212,449 2.219.114 1,302,734 834,700 0 148,156 319,878 1,993 321,871 108,580 213,291 4.847 218,138 $ 204,163 $ 212,449 $ $ 1.15 $ 1.17 $ Basic income per common share: Income from continuing operations Discontinued operations Basic net income per common share 1.10 0.02 1.12 $ 1.15 $ 1.17 $ $ 1.13 $ 1.16 $ 1.09 0.02 $ 1.13 $ Diluted income per common share: Income from continuing operations Discontinued operations Diluted net income per common share Weighted average common shares outstanding - basic Weighted average common shares outstanding-diluted 1.16 1.11 177,938 180, 156 181,429 183,835 194,351 196,237 Refer to Notes to Consolidated Financial Statements A-6 APPENDIX A American Eagle Outfitters, Inc., 2017 Annual Report AMERICAN EAGLE OUTFITTERS, INC. Consolidated Statements of Comprehensive Income February 3, 2018 204,163 For the Years Ended January 28, 2017 $ 212,449 January 30. 2016 218,138 $ In thousands) Net income Other comprehensive gain (loss): Foreign currency translation gain (loss) Other comprehensive gain (loss) Comprehensive income 5,667 5,667 209.830 (6,594) (6,594) 205,855 (19,924) (19,924 198,214 $ Refer to Notes to Consolidated Financial Statements APPENDIX A American Eagle Outfitters, Inc., 2017 Annual Report A-7 AMERICAN EAGLE OUTFITTERS, INC. Consolidated Statements of Stockholders' Equity Shares Outstanding (0) 194 516 Common Stock $ 2,496 Contributed Capital $ 569,675 31,937 Retained Earnings $ 1,543,085 Treasury Stock (2) $(965,566 Accumulated Other Comprehensive Stockholders Income Loss) Equity (9.944) $ 1139 746 31,937 (15,563) (324) 1,506 (227,071) (5.163) 26,461 (13.237) (2,332) 218,138 (227,071) (5,163) 10,892 218,138 (19.924) (19,924) 180,135 2,445 590,820 27,877 (99,624) $1,659 267 2.496 $(1,171,339) $ (29,868) (97 179) $ 1,051 376 27,877 (In thousands, except per share amounts) Balance at January 31, 2015 Stock awards Repurchase of common stock as part of publicly announced programs Repurchase of common stock from employees Reissuance of treasury stock Net income Other comprehensive loss Cash dividends and dividend equivalents ($0.50 per share) Balance at January 30, 2016 Stock awards Repurchase of common stock as part of publicly announced programs Repurchase of common stock from employees Reissuance of treasury stock Net income Other comprehensive loss Cash dividends and dividend equivalents ($0.50 per share) Balance at January 28, 2017 Stock awards Repurchase of common stock as part of publicly announced programs Repurchase of common stock from employees Reissuance of treasury stock Net income Other comprehensive loss Cash dividends and dividend equivalents ($0.50 per share) Balance at February 3, 2018 (455) (7.032) 37,241 1111 2,206 (17.247) (2.821) 212,449 (7,032) 17.173 212,449 (6,594) (6,594) (93,120) $ 1.775 775 181,886 $ 2.440 $ 603 890 17,202 2,496 $(1 141 130) $ (36,462) (90 680) $ 1,204,569 17,202 E (6.000) (871) 2.301 (87.672) (12,513) 39,043 (29,632) (5,488) 204,163 (87.672) (12,513) 3.923 204,163 5,667 5,667 2.310 $ 593.770 (90 858) $ 1,883,592 (88,548) $ 1,246.791 177,316 $ 2.496 $ 1,202 272) S (30,795 (1) 600,000 authorized, 249,566 issued and 177,316 outstanding, $0.01 par value common stock at February 3, 2018, 600,000 authorized, 249,566 issued and 181,886 outstanding, $0.01 par value common stock at January 28, 2017, 600,000 authorized, 249,566 issued and 180,135 outstanding, $0.01 par value common stock at January 30, 2016: 600,000 authorized, 249,566 issued and 194,516 outstanding. $0.01 par value common stock at January 31, 2015. The Company has 5,000 authorized, with none issued or outstanding, $0.01 par value preferred stock for all periods presented. 72,250 shares, 67,680 shares and 69,431 shares at February 3, 2018, January 28, 2017 and January 30, 2016 respectively. During Fiscal 2017, Fiscal 2016, and Fiscal 2015, 2,301 shares, 2,206 shares, and 1,506 shares, respectively, were reissued from treasury stock for the issuance of share-based payments. (2) Refer to Notes to Consolidated Financial Statements AMERICAN EAGLE OUTFITTERS, INC. Consolidated Statements of Cash Flows For the Years Ended January 28, 2017 January 30, 2016 $ 212449 $ 218,138 (4 847) 213.291 $ 212,449 $ 158,174 29,137 14,838 (835) 20.576 148,858 34,977 4,680 2.977 (9.422) (53,613) 7.705) (332) (6,705) 52,347 4,465 (5.229) (25 809) (10,695 15467 153 147 365 596 (22.259) (10,093) (7,027) (10,017) (3.189) 755 (4.099) 34,234 (17.615) (14.133 128.627 341,918 984 565 In thousands) February 3, Operating activities: 2018 Net income Gain from discontinued operations, net of tax 204,163 Income from continuing operations Adjustments to reconcile net income to net cash provided by operating 204,163 activities Depreciation and amortization Share-based compensation 169.473 Deferred income taxes 16.890 Foreign currency transaction (gain) loss 44,312 Loss on impairment of assets (5.616) Gain on sale of assets Changes in assets and liabilities: Merchandise inventory Accounts receivable (35,912) 8,837 Prepaid expenses and other (399) Other assets 5,317 Accounts payable (16.663) Unredeemed gift cards and gift certificates (874) Deferred lease credits Accrued compensation and payroll taxes 1.289 Accrued income and other taxes Accrued liabilities 2.060 Total adjustments 190.263 Net cash provided by operating activities from continuing operations 394 426 Investing activities: Capital expenditures for property and equipment (169,469) Acquisitions and purchase of long-lived assets in business combination Proceeds from sale of assets Acquisition of intangible assets (2.681) Net cash used for investing activities from continuing operations (172 150 Financing activities: (3,384) Payments on capital leases and other Repurchase of common stock as part of publicly announced programs (87.682) (12,513) Repurchase of common stock from employees 3,355 Net proceeds from stock options exercised Excess tax benefit from share-based payments (88.548) Cash dividends paid (188,772 Net cash used for financing activities from continuing operations 1.496 Effect of exchange rates on cash Cash flows of discontinued operations Net cash used for operating activities Net cash used for investing activities Net cash used for financing activities Effect of exchange rates on cash Net cash used for discontinued operations 35,000 Net increase (decrease) in cash and cash equivalents 378 613 Cash and cash equivalents - beginning of period 413 613 Cash and cash equivalents - end of period Pofar to Notes to Consolidated Financial Statements (161.494) (153.256) (10.442) 12,579 2382) (153,501 1.528) (163 022 (4,375) (7,032) 16.260 763 (90.680) (85,064 1.036 (7.635) (227.071) (5,163 7.283 657 (97237) (329,166) 18.076) (6,805) 118,546 260.067 378 813 16.805 (150,630 410,697 260.067 B-4 APPENDIX B The Buckle, Inc., 2017 Annual Report THE BUCKLE, INC. CONSOLIDATED BALANCE SHEETS (Amounts in Thousands Except Share and Per Share Amounts) ASSETS February 3, 2018 January 28, 2017 165,086 50.833 196,536 49.994 CURRENT ASSETS: Cash and cash equivalents Short-term investments (Notes B and C) Receivables Inventory Prepaid expenses and other assets (Note F) Total current assets 8,588 8.210 118.007 18,070 360,584 125,694 6,023 386,457 PROPERTY AND EQUIPMENT (Note D) Less accumulated depreciation and amortization 459,043 (309,497) 149,546 459,359 (290,364) 168,995 21,453 LONG-TERM INVESTMENTS (Notes B and C) OTHER ASSETS (Notes F and G) 18,092 6,303 6,533 Total acts $38,116 S 579.847 LIABILITIES AND STOCKHOLDERS' EQUITY 29,387 $ CURRENT LIABILITIES: Accounts payable Accrued employee compensation Accrued store operating expenses Gift certificates redeemable Income taxes payable Total current liabilities 22,307 15,646 18,202 12,364 97,906 25,079 26,906 14,695 21,199 10,737 98.616 DEFERRED COMPENSATION (Note 1) DEFERRED RENT LIABILITY Total liabilities 15.154 33,808 146,868 13,092 37,600 149,308 COMMITMENTS (Notes E and H) 488 486 STOCKHOLDERS' EQUITY (Note J): Common stock, authorized 100,000,000 shares of S.Ol par value: 48,816,170 and 48,622,780 shares issued and outstanding at February 3, 2018 and January 28, 2017, respectively Additional paid-in capital Retained carnings Accumulated other comprehensive loss Total stockholders' equity 144,279 246,570 (89) 391.248 139,398 290,737 (82) 430,539 S 538,116 S Total liabilities and stockholders' equity 379.847 APPENDIX B The Buckle, Inc., 2017 Annual Report B-5 THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands Except Per Share Amounts) February 3, 2018 Fiscal Years Ended January 28, 2017 January 30, 2016 SALES, Net of returns and allowances of $87,389, 5101,375, and $113,325, respectively $ 913,380 $ 974,873 $ 1,119,616 COST OF SALES (Including buying, distribution, and occupancy costs) 533,357 577,705 638,215 Gross profit 380,023 397,168 481,401 OPERATING EXPENSES: Selling General and administrative 206,068 39,877 245,945 205,933 38,475 244,408 212,531 39,282 251,813 INCOME FROM OPERATIONS 134,078 152,760 229,588 5,407 3,511 5,236 OTHER INCOME, Net 139,485 156,271 234,824 INCOME BEFORE INCOME TAXES 49,778 58,310 87,541 PROVISION FOR INCOME TAXES (Note F) 89,707 S 97,961 $ 147,283 NET INCOME 1.86 $ 2.04 EARNINGS PER SHARE (Note K): Basic 3.06 1.85 $ 2.03 $ 3.06 Diluted na financial statements B-6 APPENDIX B The Buckle, Inc., 2017 Annual Report THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in Thousands) Fiscal Years Ended February 3, 2018 January 28, 2017 January 30, 2016 NET INCOME S 89,707 S 97,961 S 147.283 (7) 221 98 OTHER COMPREHENSIVE INCOME, NET OF TAX: Change in unrealized loss on investments, net of tax of $17. $129, and $59, respectively Reclassification adjustment for losses included in net income, net of tax of $0, $17, and So, respectively Other comprehensive income 28 (7) 249 98 COMPREHENSIVE INCOME 89,700 $ 98,210 $ 147.381 See notes to consolidated financial statements. THE BUCKLE INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in Thousands Except Share and Per Share Amounts) Accumulated Other Comprehensive Loss Number of Shares Additional Paid in Capital Common Stock Retained Earnings Total BALANCE Jary 31, 2015 48.379,613 S 484 S 131,112 S 224,111 $ (429) S 355.278 Nate 147,283 147.283 (93,768) (93,768) 152.190 (1) 6,197 6,197 Dividends paid or common stock. (51.94 per share) Issuance of so-vested stock net of forfeitures Asociation of so-vested stock grants, set of forfeitures Income tax beacfit related to vesting of restricted shares Ce stock parchased and retired Change in realized loss on investments, set of tax 774 774 (103,693) (3,218) (3.219) 98 98 48,428,110 S 484 S 134,864 S 277,626 $ (331) S 412,603 BALANCE Jary 30, 2016 97.951 97.981 Naime Didends on command ($1.18 per share 330 380 (1940) Amortization of need sock grants, net of forfeitures Income talented to vesting of restricted shares Change in analized lesson investments, net of tax Reclesfications ment for losses included in net - BALANCE, January 28, 2017 48.002.780 SS 29137 S (133.874) Nes in Desdiends and on common seck. ($2.75 per share) Issuance of mevested stock, net of focfestures Amortization of ne-vested stock grants, net af forfeitures Change in realised loss on investments net of tax 193 390 4.883 31 48,816170 $ 488 $ 144.219 $ 246,570 S BALANCE, February 3, 2018 391.45 See notes to consolidated financial statements B-8 APPENDIX B The Buckle, Inc., 2017 Annual Report THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) February 3, 2018 Fiscal Years Ended January 28, 2017 January 30, 2016 $ 89,707 $ 97,961 S 147,283 30,745 4,883 (340) 1,628 32,787 5,330 (3,260) 1,875 32,142 6,197 (1,217) 448 CASH FLOWS FROM OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization Amortization of non-vested stock grants, net of forfeitures Deferred income taxes Other Changes in operating assets and liabilities: Receivables Inventory Prepaid expenses and other assets Accounts payable Accrued employee compensation Accrued store operating expenses Gift certificates redeemable Income taxes payable Deferred rent liabilities and deferred compensation (413) 7,687 (12,047) 4,584 (4,599) 951 3,853 23,872 7 (8,314) (6,220) 8,056 (1,659) (3,610) (1,812) (389) (19,645) 9,722 (182) (3,794) (3,345) (1,134) (4,441) (2,323) (2,997) 1,662 (1,730) 119,721 148,866 159,322 Net cash flows from operating activities Net cash flows from operating activities 119,721 148,866 159,322 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment Proceeds from sale of property and equipment Change in other assets Purchases of investments Proceeds from sales/maturities of investments (13,462) 263 92 (56,631) 52,441 (31,663) 318 80 (41,621) 44,221 (34,578) 199 100 (29,714) 29,135 Net cash flows from investing activities (17,297) (28,665) (34,858) CASH FLOWS FROM FINANCING ACTIVITIES: Purchases of common stock Payment of dividends (3,219) (93,768) (133,874) (84,850) (133,874) (84,850) (96,987) Net cash flows from financing activities (31,450) 35,351 27,477 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 196,536 161,185 133,708 CASH AND CASH EQUIVALENTS, Beginning of year 165,086 $ 196,536 $ 161,185 CASH AND CASH EQUIVALENTS, End of year See notes to consolidated financial statements