Financial Information for American Eagle is presented in Appendix A, and financial information for Buckle is presented in Appendix B.
1-a. Calculate the following risk ratios for both companies for the year ended February 3, 2018 (Use 365 days a year. Round your intermediate calculations and final answer to 1 decimal place.)
1-b. Based on these calculations, which company appears to be more risky?
2-a. Calculate the following profitability ratios for both companies for the year ended February 3, 2018
2-b. Based on these calculations, which company appears to be more profitable?
Risk Ratios
a.Receivables turnover ratio
b. Average collection period
c. Inventory turnover ratio
d. Average days in inventory
e. Current ratio
f. Acid-test ratio
g. Debt to equity ratio
Profitability Ratio
- Gross profit ratio
- Return on assets
- Profit Margin
- Asset turnover
- Return on equity
AMERICAN EAGLE OUTFITTERS, INC Consolidated Balance Sheets February 3, January 28, r shere Assets Current assets 378,613 358,446 86,634 77,536 901,229 707,797 49,373 14,887 Cash and cash equivalents 413,613 S Merchandise inventory 398,213 78,304 78,400 968,530 724,239 46,666 15,070 9,344 52,464 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 60,124 1,782,660 Liabilities and Stockholders' Equity Current liabilities 236,703 $ 246,204 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 54,324 83,312 12,781 52,347 11,203 34,551 485,221 12,220 52,966 12,780 36,810 493,783 Total current liabilities Deferred lease credits Non-current accrued income taxes Other non-current liabilities 47,977 7,269 4,537 34,657 84,308 Total non-current liabilities Commitments and contingencies 84,301 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 2,496 603,890 2,496 593,770 (30,795) 1,883,592 1202,272) 1.246,791 (36,462) 1,775,775 1141.130 1816,3131204.569 1,782,660 Total stockholders' equity Total liabilities and stockholders' equity Refer to Notes to Consolidated Financial Statements AMERICAN EAGLE OUTFITTERS, INC. Consolidated Statements of Cash Flows For the Years Ended February 3, January 28, January 30 Operating activities: Net income Gn from discontinued operations, net of tax ncome from continuing opera Adjustments to reconcile net income to net cash provided by aperating 204,163 212.449S 218,138 847 204,163 12 449S 213,291 158,174 29,137 14,838 Depreciation and amortization Sharo-based compensation Deferred income taxes Forcign currancy transaction (gain) loss Loss on impairment of assets Gain on sale of assets 169,473 6,890 148,858 34,977 4,680 (5,616) (835) 20.576 (9422) Changes in assets and liabilities (35,912)(53.613)(22.259) 10,093) (7,027) 10,017) (3,189) 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 8,837 (399) (332) (6.705) 52.347 4.465 (16,663) 874) 984 (5.229) (4.039) (25.809) 34.234 565 Net cash provided by operating activities from continuing operations invasting activitios: 394,428 (169.469) (161.494 (153,256) Capital expenditures for property and equipment Acquisitions and purchase of long-lived assots in business combination Procoeds from sale of assets Acquisition of intangble assots 12,579 681 172,150 Net cash used for investing activities from continuing operations Financing activitios 163,022 (3,384 (87.682) (12,513) 3,355 7,635) (227,071) Payments on capital leases and ather Repurchase of common stock as part of publicly announced programs Repurchase of common stack from emplayees Net proceeds from stock options exercised Excess tax benefit from share-based payments Cash dividends paid 4.375) 7.032) 16.260 7,283 763 657 548) 85.064 Net cash used for financing activities from continuing operations Effect of exchange rates on cash Cash fows of discontinued operations 188,772 329,166) (6,805) 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 Net increase (decrease) in cash and cash equivalents Cash and cash equivalents-beginning of period 35,000 118,546 067 378 813 150,630) Cash and cash oquivalents-end of period 260,087 Refer to Notes to Consolidated Financial Statements AMERICAN EAGLE OUTFITTERS, INC Consolidated Statements of Comprehensive Income For the Years Ended January 28, 2017 February 3, January 30, Net income Other comprehensive gain (loss) Foreign currency translation gain (loss) Other comprehensive gain (loss) 204,163 $ 212,449 $ 218,138 (19,924) 19,924) 5,667 5,667 (6,594) 209,830 $ 205,855 $ 198,214 Refer to Notes to Consolidated Financial Statements AMERICAN EAGLE O UTFITTERS, INC Consolidated Statements of Operations For the Years Ended January 28, Fobruary 3, January 30, Total net revenue Cost of sales, including certain buying, occupancy and warehousing $3,795,549 $ 3,609,865 $3,521,848 2,219,114 1,302,734 834,700 2 425,044 1,370,505 879,685 20,611 167,421 302,788 15,615 287,173 2,242,938 1,366,927 857,562 21,166 156,723 331,476 3,786 335,262 122,813 212,449 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 148,156 319,878 1,993 321,871 108,580 213,291 4,847 218,138 204,163 204,163 $ 212,449 $ Basic income per common share 1.15 $ 1.17 $ Income from continuing operations Discontinued operations 0.02 1.12 1.15 $ 1.17 $ Basic net income per common share Diluted income per common share 1.13 $ Income from continuing operations Diluted net income per common share Weighted average common shares outstanding 1.16 $ 0.02 1.131.16 S-111 194,351 basic 177,938 180,156 181,429 183,835 Weighted average common shares outstanding- diluted 196,237 Refer to Notes to Consolidated Financial Statements AMERICAN EAGLE OUTFITTERS, INC. Consolidated Statements of Stockholders' Equity Accumulated Shares Outstanding Common Contrbuted CommonContrbuted Retained Earnings Stock (12)Income (Loss Eqity Treasury Stock housards share Balance at January 31, 2015 Stock awards 194516 2.496 569,675 $1.543,085 $ (965,566) (9.944) $1.139,746 31.937 31,937 Repurchase of common stock as part of publicly (227,071) (5,163) 10,892 218.138 (19.924) (19.924) (15,563) (324) 1,506 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 (227.071) (5,163) 26,461 -(13,237) (2,332) 218,138 share) Balance at January 30, 2016 Stock awards Repurchase of common stock as part of publicly 2445(99,624) 180,135 2496 590,820 $1,659,267 $(1.171339) (29,868) $1,051,376 27,877 27.877 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 (455) 2.206 7,032) 17,173 212,449 (6,594) (17247)12821) 37,241 212,449 (6.594) (90,680) 181.886 2496 603,890 $1775775 $(1.141130) (36462) $ 1204,569 17.202 Balance at January 28, 2017 Stock awards Repurchase of common stock as part of publiclty 17,202 (87.672) 12,513) 3,923 204.163 5,667 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 (6.000) (87,672) (12,513) 39,043 (871) 2.301 (29,632) (5,488) 204.163 5.667 share Balance at February 3, 2018 177316 2496 593,770 $1,883,592 (1,202,272)$ (30,795) 1,246,791 THE BUCKLE, INC CONSOLIDATED BALANCE SHEETS (Amounts in Thousands Except Share and Per Share Amounts) February 3, 2018 January 28, 2017 ASSETS CURRENT ASSETS 165,086 $ 196,536 49,994 8,210 125,694 6,023 386.457 Cash and cash equivalents Short-term investments (Notes B and C) 0,833 8,588 118,007 18,070 360,584 Prepaid expenses and other assets (Note F) Total curent assets 459,043 (309.497) 149,546 PROPERTY ANDEQUIPMENT (Note D) 459,359 168,995 21.453 6,533 LONG-TERM INVESTMENTS (Notes B and C) OTHER ASSETS (Notes F and G) 18,092 6.303 538,116 S Total assets 579.847 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES 25,079 26,906 14,695 21.199 10,737 98,616 Accounts payable Accrued employee compensation Accrued store operating expenses Gift certificates redeemable Income taxes payable 29,387 S 22,307 15,646 18,202 12,364 97,906 Total current liabilities 13,092 37,600 149.308 DEFERRED COMPENSATION (Note I) DEFERRED RENT LIABILITY 15,154 33,808 146,868 Total liabilities COMMITMENTS (Notes E and H) STOCKHOLDERS' EQUITY (Note J) Common stock, authorized 100,000,000 shares of S.01 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 eanings Accumulated other comprchensive loss 488 144,279 246,570 486 139.398 290,737 (82) Total stockholders' equity 391,248 430,539 Total liabalities and stockholders' equity 538,116 579,847 See notes to consolidated financial statements THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWs (Amounts in Thousands) Fiscal Years Ended February 3, 2018 January 28, 2017 January 30, 2016 CASH FLOWS FROMOPERATING ACTIVITIES: 147,283 Net income 89,707$ 97,961 S Adjustments to reconcile net income to net cash flows from operating activities: 32,787 5,330 (3,260) 30,745 4,883 (340) 1,628 32,142 6,197 (1,217) Amortization of non-vested stock grants, net of forfeitures Deferred income taxes Other Changes in operating assets and liabilities: 448 3,853 23,872 (389) (19,645) 9,722 (182) (3,794) (3,345) (1,134) (4.441) (2,323) 7,687 (12,047) 4,584 (4,599) 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 (8,314) (6,220) 8,056 (1,659) (2,997) 1,662 (1,730) (1,812) Net cash flows from operating activities 119,721 148,866 159,322 CASH FLOWS FROM INVESTING ACTIVITIES: (13462) 263 92 (56,631) 52,441 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 34,578) 199 31,663) 80 (41,621) 44,221 (29,714) Net cash flows from investing activities (17,297) (28,665) (34,858) CASH FLOWS FROM FINANCING ACTIVITIES: Purchases of common stock (3,219) (93,768) Payment of dividends (133,874) (84,850) Net cash flows from financing activities (133,874) (96,987) 27,477 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (31,450) 35,351 161,185 133,708 CASH AND CASHEQUIVALENTS, Beginning of year CASH AND CASH EQUIVALENTS, End of year See notes to consolidated financial statements 196,536 165,086 196,536 S 161,185 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 89,707 S 97,961 $ 147.283 OTHER COMPREHENSIVE INCOME, NET OF TAX: Change in unrealized loss on investments, net of tax of $17, S129, and S59, respectively Reclassitication adjustment for losses included in net income, net of tax of SO, $I7, and S0, 221 98 respectively Other comprehensive income 28 249 98 COMPREHENSIVE INCOME 89,700 $ 98,210 S 147,381 See notes to consolidated financial statements. THE BUCKLE, INC CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands Except Per Share Amounts) Fiscal Years Ended February 3, 2018 January 28, 2017 January 30 2016 SALES, Net of returns and allowances of $87,389, S101,375, and S113,323, respectivelyS 913,380 S 974,873 $ 577,705 397.168 1,119,616 COST OF SALES (Including buying, distribution, and occupancy costs) 533,357 638,215 Gross profit 380,023 481,401 OPERATING EXPENSES: Selling General and administrative 206,068 39,877 245,945 205,933 38,475 244,408 212,531 39,282 251,813 152,760 229,588 INCOME FROM OPERATIONS 134,078 OTHER INCOME, Net ,407 3,511 5,236 INCOME BEFORE INCOME TAXES 139,485 156,271 234,824 58,310 87,541 PROVISION FOR INCOME TAXES (Note F) 49.778 89,707 S 9796 S 147,283 NET INCOME EARNINGS PER SHARE (Note K) 1.86 S 3.06 2.04 $ Basic 1.85 S 2.03 S 3.06 Diluted See notes to consolidated financial statements
