Ratio Analysis: Urban Outfitters

Assessing how well a companys strategy is presently working involves evaluating the strategy from both a qualitative standpoint and a quantitative standpoint. The stronger a companys current overall performance, the less likely the need for radical strategy changes. The weaker a companys performance, the more its current strategy must be questioned.

Table 4.1 provides a compilation of the financial ratios most commonly used to evaluate a companys financial performance and balance sheet strength. Assurance of Learning Exercise 1 provides you with an opportunity to assess Urban Outfitterss financial performance and balance sheet strength. This exercise requires the same calculations and overall assessment.

Using the formulas in Table 4.1 and Urban Outfitterss financial statement information presented below for Urban Outfitters, Inc., calculate the following ratios for Urban Outfitters for both 2016 and 2017. Be sure to report items (a) through (e) in percentages (i.e., multiply your result x 100).

Using the formulas in Table 4.1 and Urban Outfitterss financial statement starting on page 117, calculate the following measures of financial performance. Be sure to report items (a) through (e) in percentages (i.e., multiply your result x 100).

a. Gross profit margin

b. Operating profit margin

c. Net profit margin

d. Times-interest-earned (or coverage) ratio

e. Return on stockholders equity

f. Return on assets

g. Debt-to-equity ratio

h. Days of inventory

i. Inventory turnover ratio

j. Average collection period

rev: 02_06_2020_QC_CST-5422, 05_22_2020_QC_CS-213591