Case 10-9 Specialty Retailer

CASE 109 SPECIALTY RETAILER With this case, we review the cash flow of several specialty retail stores. The companies reviewed and the year-end dates are as follows: 1. Abercrombic & Fitch Co. (52-week fiscal year ended January 29, 2011; 52-week fiscal year ended January 30, 2010; 52-week fiscal year ended January 31, 2009) "Abercrombie \& Fitch Co ... is a specialty retailer that operates stores and direct-toconsumer operations." 10-K Source: Abercrombie \& Fitch 2010 10-K 2. Limited Brands, Inc. (52-week fiscal year ended January 29, 2011; 52-week fiscal year ended January 30, 2010; 52-week fiscal year ended January 31, 2009) "We operate in the highly competitive specialty retail business." 10K Source: Limited Brands 2010 10-K 3. Gap, Inc. (52-week fiscal year ended January 29, 2011; 52-week fiscal year ended January 30, 2010; 52-week fiscal year ended January 31, 2009) "We are a global specialty retailer offering apparel, accessories, and personal care products." 10K Source: Gap lne 2010 10-K "No current maturities of long-term debt and current notes payable. Required a. Comment on the difference between net cash provided by operating activities and net income. Speculate on which number is likely to be the better indicator of long-term profitability. b. Comment on the data reviewed for each item c. Do any of these firms appear to have a cash flow problem? Comment