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Financial information for Buckle is presented in Appendix B. Required: 1-a. Calculate the debt to equity ratio for the past two years. (Round your final
Financial information for Buckle is presented in Appendix B. Required: 1-a. Calculate the debt to equity ratio for the past two years. (Round your final answers to 2 decimal places.) 2018 2017 Debt to Equity Ratio 1-b. Did the ratio increase or decrease in the more recent year? Increase Decrease 2-a. Calculate the return on assets for the most recent year. (Round your final answer to 1 decimal place.) Return on Assets 7.0 % 2-b. Does the return on assets exceed the cost of borrowing of approximately 4%? (Do not round your intermediate calculations.) Yes No 3. Review the balance sheet and note E to the financial statements. Based on this information, how would you rate the bankruptcy risk of Buckle? O High Low O Neutral B-4 APPENDIX B The Buckle, Inc., 2017 Annual Report THE BUCKLE, INC CONSOLIDATED BALANCE SHEETS (Amounts in Thousands Except Share and Per Share Amounts) February 3, 2018 January 28, 2017 ASSETS s CURRENT ASSETS: Cash and cash equivalents Short-term investments (Notes Band) Receivables 165,086 50,613 8,598 118,007 18.070 360,584 1965 19.994 8210 125,694 6,023 386,457 Seventy Prepaid expenses and others (Note 1) Total current sets PROPERTY AND EQUIPMENT (Note D) Less accumulated depreciation and amortization 459,043 (309,497) 149,546 459.359 (290,364) 168.995 21.450 18,092 LONG-TERM INVESTMENTS (Notes and C) OTHER ASSETS (Notes Fund) 63 Totalsts 539,116 $ 579.847 LLABILITIES AND STOCKHOLDERS' EQUITY $ CURRENT LIABILITIES: Accounts payable Accrued employee compensation Accrue store operating expenses Gift certificates redeemable Income taxes payable Total current liabilities 29,387 22,307 15.646 18,202 12,364 97,906 25.079 26.306 14.695 21,199 10.737 96.616 DEFERRED COMPENSATION (Note I) DEFERRED RENT LIABILITY Total listilities 15,154 33,0 146,868 13,092 37.600 149.303 COMMITMENTS (Notes E and H) STOCKHOLDERS' EQUITY (Note J} Common stock, authorized 100.000.000 shares of 5.01 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 earings Accumulated other comprehensive loss Total stockholders' equity 488 144,279 246,570 (89) 391,248 486 139.395 290, 737 430,539 Totallibilities and stockholders' uity 538,116 $ 579.847 THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands Except Per Share Amounts) February 3, 2018 Fiscal Years Ended January 28, 2017 January 30, 2016 $ 913,380 $ 974,873 $ 1,119,616 SALES, Net of returns and allowances of $87,389, 5101,575, and $113,325, respectively COST OF SALES (Including buying, distribution, and cocupancy costs) 533,357 577,705 638.215 Gross profit 380,023 397,168 481,401 OPERATING EXPENSES: Selling General and administrative 206,068 39.877 245,945 205,933 38,475 244,408 212,531 39.282 251,813 INCOME FROM OPERATIONS 134,078 152,760 229,588 OTHER INCOME, Net 5,407 3,511 5.236 INCOME BEFORE INCOME TAXES 139,485 156,271 234804 PROVISION FOR INCOME TAXES (Note 49,778 58,310 87,541 NET INCOME 89,707 S 97,961 $ 147.283 EARNINGS PER SHARE (Note K) Basic 1.86 $ 2.04 $ 3.06 Diluted S 1.85 5 2.03 S 3.06 See notes to consolidated financial statements. THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) February 3, 2018 Fiscal Years Ended January 28, 2017 January 30, 2016 S 89,707 S 97.961 S 147,283 30,745 4.883 (340) 1,628 32,787 5.330 (3.260) 1.875 32,142 6,197 (1.217) 448 CASH FLOWS FROM OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization Amortization of non-vested stock grants, net of forfeitures Deferred income taxes Other Changes in operating assets and liabilities: Receivables Inventory Prepaid expenses and other assets Accounts payable Accrued employee compensation Accred store operating expenses Gift certificates redeemable Income taxes payable Deferred rent liabilities and deferred compensation (413) 7,687 (12,047) 4.584 (4,599) 3,853 23.872 7 (8.314) (6.220) 8,056 (1,659) (3.610) (1.812) (389) (19,645) 9,722 (182) (3,794) (3,345) (1,134) 951 (2,997) 1,662 (1,730) (2.323) Net cash flows from operating activities 119,721 148,866 159,322 CASH FLOWS FROM INVESTING ACTIVITIES 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 (13.462) 263 92 (56,631) 52.441 (31,663) 318 80 (41,621) 44.221 (34,578) 199 100 (29,714) 29,135 Net cash flows from investing activities (17.297) (28,665) (34,858) CASH FLOWS FROM FINANCING ACTIVITIES: Purchases of common stock Payment of dividends (3.219) (93,768) (133.874) (84,850) Net cash flows from financing activities (133.874) (84.850) (96,987) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (31,450) 35,351 27,477 CASH AND CASH EQUIVALENTS, Beginning of year 196,536 161.185 133,708 CASH AND CASH EQUIVALENTS, End of year 165,086 S 196,536 S 161,185 See notes to consolidated financial statements. THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in Thousands Except Share and Per Share Amounts) Accumulated Othe Comprebeshe Laws Number Shares Additional Paid in Capital Commen Stock Retained Earning Total BALANCE, January 31, 2015 48.379,613 $ 484 s 131.112 $ 224111 $ $ 355 276 147,283 1479 193.762) 193.768) 152.190 Net income Dividends paid a common stock, (1.94 per share) Issuance of stod stock, net of frecitares Amortization of non-vested stock graus, net of foefeitures Income tax benefit related to vesting of restricted shares Controllock purchased and stired Change in unrealized loa on investments, act of tax 6197 6.197 774 3219) (101,3) (1) (3.218) 98 95 BALANCE, January 30, 2016 4.2.110 5 484 s 134,54 5 277,625 5 (331) 5 412.643 97,96! 97,061 1848) (84.850 194,670 2 (23) 5.330 5.330 Nel nome Dividendspaid common ok, per share Iswance of non-nesto stock, net of fiefeitures Ametics of metal tack gratis, net of fifcitur Income tax benefit related to vesting of restricted shares Change in utralized loss on investments, acte tax Recessification adjustment for losses included in net income, act of tax (794) (1990 221 221 28 BALANCE, January 28, 2017 40.623780 S 486 S 139,395 S 200,7 $ (R2) s 430539 89,707 89,707 (133,874) Net income Dividend paid common stock, ($2.75 per share) Issuance of non-vested stock, net of foefeitures Amortization of movested stock gratis, net of foefeitures Change in urcalized on investments, act of tax 19,90 (2) 4,893 () BALANCE, February 3, 2018 4.R16,170 s 488 144.279 s 146,50 (13) 5 39124 See notes to consolidated financial statements. February 3, 2018 Fiscal Years Ended January 28, 2017 January 30, 2016 89,707 $ 97,961 147,283 30,745 32,787 5.330 (3.260) 1.875 32,142 6,197 (1,217) 448 (3:40) CASH FLOWS FROM OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization Amortization of non-vested stock grants, niet of forfeitures Deferred income taxes Other Changes in operating assets and liabilities: Receivables Inventory Prepaid expenses and other assets Accounts payable Accrued employee compensation Accrued store operating experises Gift certificates redeemable Income taxes payable Deferred rent liabilities and deferred compensation (413) (12.047) 4,584 (4,599) 951 (2.997) 3853 23.872 7 (8,314) (6.220) 8,056 (389) (19,645) 9,722 (182) (3,794) (3,345) (1.134) (4,441) (2,528) (3,610) (1.812) (1.710) 119,721 148.866 159,322 Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES: 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 (31,663) 318 (13,462) 263 92 (56,631) 52.441 0 (34,578) 199 100 (29,714) 29,135 (41,621) 44.221 Net cash flows from investing activities (17,297) (28,665) (34,858) CASH FLOWS FROM FINANCING ACTIVITIES: Purchases of common stock Payment of dividends (3,219) (93,768) (133.874) (84850) Net cash flows from financing activities (133.874) (84.850) 196,987) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (31,450) 35,351 27,477 CASH AND CASH EQUIVALENTS, Beginning of your 196,516 161,185 133,708 CASH AND CASH EQUIVALENTS, End of year 165,086 196,536 S 161,185 See notes to consolidated financial statements
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