Comparing Income Statements and Balance Sheets of Competitors Following are selected income statement and balance sheet data from two retailers: Abercrombie & Fitch (clothing in the high-end market) and TJX Companies (clothing retailer in the value priced market), for the fiscal year ended February 2, 2019. (a) Express each income statement amount as a percentage of sales. Round your answers to one decimal place (ex: 0.2345 = 23.5%) % ($ thousands) Sales Cost of goods sold Gross profit Total expenses Net income Income Statement ANF TJX $3,590,109 % $38,972,934 1,430,193 % 27,831,177 2,159,916 % 11,141,757 2,081,108 % 8,081,959 $ 78,808 % $3,059,798 % % % % (b) Express each balance sheet amount as a percentage of total assets. Round your answers to one decimal place (ex: 0.2345 = 23.5%). % % % Balance Sheet ($ thousands) ANF Current assets $1,335,950 Long-term assets 1,049,643 Total assets $2,385,593 Current liabilities $558,917 Long-term liabilities 608,055 Total liabilities 1,166,972 Stockholders' equity 1,218,621 Total liabilities and equity $2,385,593 TJX % $8,469,222 % 5,856,807 % $14,326,029 % $5,531,374 % 3,746,049 % 9,277,423 % 5,048,606 % $14,326,029 % % % % % Which of the following statements about business models is most consistent with the computations for part (a)? OANF's expenses as a percentage of sales are higher because it spends more on advertising than does TJX. OANF is a high-end retailer that is able to charge high prices for its products, but bears substantial operating costs to support its "shopping experience." OANF's profit is higher than TJX's as a percentage of sales because its sales are higher than TJX's. OANF's gross profit is higher than TJX's because its sales volume allows it to manufacture clothes at a lower per unit cost than can TJX. Which of the following statements about business models is most consistent with the computations for part (b)? OANF reports lower current assets as a percentage of total assets because it pays its vendors on a more timely basis than does TJX. OANF reports higher long-term assets as a percentage of total assets because it depreciates its long-term assets more slowly than does TJX. OANF reports lower current assets and higher long-term assets as a percentage of total assets because it carries less inventory and has a greater capital investment in its stores than does TJX. OANF reports lower current assets as a percentage of total assets because it is a smaller company and cannot afford the investment in inventory. (c) Which company has a lower proportion of debt? What do the ratios tell us about relative riskiness of the two companies? OANF has a lower proportion of debt than does TJX, which implies that ANF is less risky than TJX. OTJX has a lower proportion of debt than does ANF, which implies that TJX is less risky than ANF. OANE has a higher proportion of debt than does TJX, which implies that ANF is less risky than TJX. OTJX has a higher proportion of debt than does ANF, which implies that TJX is less risky than ANF
