Financial information for American Eagle is presented in Appendix A. Required: 1. Calculate the following risk ratios for the year ended February 3, 2018. (Use 365 days a year. Round your intermediate calculations and final answers to 1 decimal place.) times Risk Ratios a Receivables turnover ratio b. Average collection period c. Inventory turnover ratio d Average days in inventory Current ratio Acid-test ratio 9 Debt to equity ratio days times days % 2. Calculate the following profitability ratios for the year ended February 3, 2018. (Round your intermediate calculations and final answers to 1 decimal place.) Profitability Ratios a Gross profit ratio b Return on assets c. Profit margin d Assotturnover % % % times e Return on equity % A-4 APPENDIX A American Eagle Outfitters, Inc., 2017 Annual Report AMERICAN EAGLE OUTFITTERS, INC Consolidated Balance Sheets February 3 2018 January 28, 2017 $ $ in thousands oncept 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 Intang ble 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 86,834 77 536 901,220 707,797 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 38 810 493,783 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, 50.01 par value; 5,000 shares authorized: none issued and 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 47977 7.289 29055 84 301 45,114 4,537 34.657 B4 308 2,496 563,770 (30.795) 1883,592 (1 202 272) 1246 791 1,816,313 2,490 803,890 (36.462) 1,775,775 (1 141 130 1,204 569 1,782000 nafar to hear the consolidater 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 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 2242938 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 5 1.13 $ 1.16 $ Diluted income per common share Income from continuing operations Discontinued operations Diluted net income per common share 1.09 0.02 1.11 1.13 1.16 181,420 183.835 194,351 198,237 Weighted average common shares outstanding - basic 177,938 Weighted average common shares outstanding-diluted 180,156 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 (los) 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 A-7 APPENDIX A American Eagle Outfitters, Inc., 2017 Annual Report AMERICAN EAGLE OUTFITTERS, INC. Consolidated Statements of Stockholders' Equity Shares Outstanding Common Stock Accumulated Other Comprehensive Stockholders Income (Loss) Equity 19944) 55139,745 31,937 194,516 2.496 Contributed Retained Treasury Capital Earnings Stock $ 569,675 51.543,086 $(965,566) 31,937 (227.071) (5.163) (13,237) (2,332) 26.461 218,138 (15,563) (324) 1,506 111 1227,071) (5,163) 10.892 210.138 (19,924) (19.924) (97179 129 868) $ 1.051 376 27.877 180 135 2445 (99,624) $ 590,820 $1,659,267 $0.171 339) 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 Ropurchase of common stock from employees Reissuance of treasury stock Net income Other comprehensive loss Cash dividends and dividend equivalents (50.50 per sharo) 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 (50.50 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 (50.50 per share) Balance at February 3, 2018 (455) 2.206 IIIIIIIIIIIIIIIIII (7,032) 37,241 (17.247) (2.821) 212.449 (7,032) 17.173 212.449 (5,594) (6,594) 100.680) (36.462) $1 204,567 17.202 181,886 2440 03.120 603,090 $ 1.775,776 11,141,130) 17,202 (67.672) (12,513) (29,632) (5.488) 39.043 204,163 (6.000) (871) 2.301 (87.672) (12,513) 3.923 204,163 5,667 5.667 2310 3593,770 00850 $ 1.833,592 $11,202 272) 5 (B8 540) (30.795) 5 1,246, 791 2496 177,316 $ (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, 30.01 par value common stock at January 28, 2017, 600,000 authorized, 249,568 issued and 180,135 outstanding, 50.01 par value common stock at January 30, 2016, 600,000 authorized, 240,566 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, 30.01 par value preferred stock for all periods presented 72,250 shares, 67,650 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 A-8 APPENDIX A American Eagle Outfitters, Inc., 2017 Annual Report AMERICAN EAGLE OUTFITTERS, INC. Consolidated Statements of Cash Flows February 2010 For the Years Ended January 28, 2017 January 30, 2015 204 163 $ 212.449 $ 218.138 14.847) 213,291 204,163 5 212.449 $ 169,473 16,890 44,312 (5,616) 158,174 29.137 14838 (835) 20.576 148,858 34.977 4.680 2.977 (9 422) in thousands Operating activities Not incomo Gain from discontinued operations, net of tax Income from continuing operations Adjustments to reconcile net income to not cash provided by operating activities Depreciation and amortization Sharo-based compensation Deferred income taxes Foreign currency transaction (gain) loss Loss on Impairment of assets Gain on sale of assets Changes in assets and liabilities: Merchandise Inventory Accounts receivable Prepaid expenses and other Other assets Accounts payable Unredeemed gift cards and gift certificates Deferred lease credits Accrued compensation and payroll taxes Accrued income and other taxes Accrued liabilities Total adjustments Net cash provided by operating activities from continuing operations Investing activities: Capital expenditures for property and equipment Acquisitions and purchase of long lived assets in business combination Proceeds from sale of assets Acquisition of intangible assets Net cash used for investing activities from continuing operations Financing activities Payments on capital losses and other Repurchase of common stock as part of publicly announced programs Repurchase of common stock from employees Net proceeds from stock options exercised Excess tax benefit from share-based payments Cash dividends paid Net cash used for financing activities from continuing operations Effect of exchange rates on cash Cash flows of discontinued operations Net cash used for operating activities Net cash used for investing activities Not cash used for financing activities Efect of exchange rates on cash Nel cash used for discontinued operations Net increase (decrease) in cash and cash equivalents Cash and cash equivalents beginning of period Cash and cash equivalents and of period (35,912) 8,837 (399) 5,317 (16,663) (874) 984 1.289 565 2,060 190 203 394 426 (53.613) 7,705) (332) (6,705) 52.347 4 465 (5.229) (25 809) (10.695) (15.467) 153.147 365,695 122.250) (10.093 (7.027) (10.017) (3.189) 755 (4.099) 34 234 (17,615) (14133 128.627 341 918 (169,469) (161494) (153,256 (10.442) 12.579 (2.342) (153 501) 26.01 (172 150 0.528) (16.3.022) (3,384) (87.602) (12.513) 3,355 (4.375) 7032) 16 280 783 190.680 (86064 1036 (7,635) (227.071) (5,163) 7.283 857 197237 (229.165) 13.076) (88.548 (188772) 1,400 (6.805) III 35,000 370.013 413613 118,546 200067 378 613 16.805 (150,630) 410,692 260.067 Refer to Notes to Consolidated Financial Statements APPENDIX A American Eagle Outfitters, Inc., 2017 Annual Report A-9 AMERICAN EAGLE OUTFITTERS, INC. Notes to Consolidated Financial Statements For the Year Ended February 3, 2018 1. Business Operations American Eagle Outfitters, Inc. (the Company or AEO, Inc."), a Delaware corporation, operates under the American Eagle Outfitters ("AEO") and Aerie by American Eagle Outfitters ("Aerie") brands Founded in 1977, AEO, Inc. is a leading multi-brand specialty retailer that operates more than 1,000 retail stores in the US and internationally, online at www.ae.com and www.aerie.com and international store locations managed by third-party operators. Through its portfolio of brands, the Company offers high quality, on-trend clothing, accessories and personal care products at affordable prices. The Company's online business, AEO Direct, ships to 81 countries worldwide In Fiscal 2015 AEO Inc. acquired Tailgate Clothing Company (Tallgato"), which owns and operates Tailgate, a vintage, sports-inspired apparel brand with a college town store concept, and Todd Snyder New York, a premium menswear brand, Merchandise Mix The following table set forth the approximate consolidated percentage of total net revenue from continuing operations attributable to each merchandise group for each of the periods indicated Men's apparel and accessories Women's apparel and accessories (excluding Aero) Aerie Total For the Years Ended February 3 January 28, 2010 2017 34% 35% 53% 54% 13% 11% 100% 100% January 30, 2010 37% 54% 9% 100% 2. Summary of Significant Accounting Policies Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation At February 3, 2018, the Company operated in one reportable segment The Company exited its 77kids brand in 2012. These Consolidated Financial Statements reflect the results of 77kids as discontinued operations for all periods presented Fiscal Year Our fiscal year ends on the Saturday nearest to January 31. As used herein, "Fiscal 2018" refers to the 52-week period ending February 2, 2019 *Fiscal 2017" refers to the 53-week period ended February 3, 2018. "Fiscal 2016" and "Fiscal 2015 refer to the 52-week periods onded January 28, 2017 and January 30, 2016, respectively