Based on the case study ("Signet Jewelers: Assessing Customer Financing Risk") below, please answer the following case questions:

1. Consider the business model of Signet, Tiffanys, and Blue Nile. How are the business models reflected in the financial statements of each company? Use financial ratio analysis to identify the business model difference. 2. In your assessment, which of the three companies is performing better and why? 3. What risks and opportunities does in-house customer financing create for Signet? How can we identify and assess the extent of this risk using financial statement information? 4. How do you assess the performance of Signets in-house financing program? 5. Do you agree with Cohodess critique of Signets financing risk and its financial reporting of the risk?

Case overview: "I think they're heading for a cliff," said Marc Cohodes referring to his latest short-sell target, Signet Jewelers (Signet).' Cohodes had made a long career as a canny short seller, with successful shorts on companies from pinball manufacturers to speech-recognition software companies to subprime lenders. In early 2016, he had set his sights on Signet, the parent company of jewelry brands such as Kay, Zales, and Jared. Cohodes believed that Signet had become addicted to boosting sales through a risky customer credit program and had a product portfolio consisting of low-quality jewelry -"trinkets,'" as he called them.3 According to Cohodes, Signet was also masking the quality of its credit program through a practice called recency accounting, which allowed them to downplay the number of customers who were delinquent on repayment. Signet pushed back, with CEO Mark Light decrying the "targeted attack" of Cohodes and other short sellers and affirming that its in-house customer financing program, which the company considered a major competitive advantage, followed "strict risk tolerance standards." The company also announced strategic moves, including the potential sale of its credit portfolio and an investment by a private equity firm. Investors and analysts appeared to buy Signet's argument: its stock price had stabilized by February 2017, buoyed by bullish arguments for Signet's growth prospects and competitive advantages in a fragmented jewelry industry. Cohodes was undeterred. He said, "Their credit book, to me, is beyond toxic. So you have a toxic business, a toxic combination, and I don't know their way out. I do not know their way out."