Ratio AnalysisUrban Outfitters Read the overview below and complete the activities that follow. Assessing how well a companys strategy is presently working involves evaluating the strategy from 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. The goal of this exercise is for you to understand how well a companys strategy is working based on its financial results. Before completing this exercise, be sure to review Chapter 4, Evaluating a Companys Resources, Capabilities, and Competitiveness, as well as Table 4.1, Key Financial Ratios: How to Calculate Them and What They Mean, which provides a compilation of the financial ratios most used to evaluate a companys financial performance and balance sheet strength. You will also need the Urban Outfitters financial statements presented below.

From 2018 to 2019, Urban Outfitters' return on shareholder equity showed a(n)

Multiple Choice

A) unfavorable decrease. B) favorable decrease. C) neither a favorable nor an unfavorable increase or decrease. D) unfavorable increase. E) favorable increase.

Consolidated Income Statements for Urban Outfitters, Inc., 2018-2019 (in thousands, except per share data) 2018 2019 Net sales (total revenue) Cost of sales Selling, general, and administrative Operating income $3,616,014 $3,950,623 2,440,507 2,603,911 915,615 965,399 $259,892 $381,313 (6,325) 10.565 Other income (expense). Other expenses. Interest income and other, net Income before income taxes. Provision for income taxes Net income.. Basic earnings per share. Diluted earnings per share (4,840) 6.314 261,366 153,103 385,553 87,550 $ 108,263 $298,003 $ 2.75 $ 0.97 $ 0.96 $ 2.72 Consolidated Balance Sheets for Urban Outfitters, Inc., 2018-2019 (in thousands, except per share data) January 31, January 31, 2018 2019 Assets Current Assets Cash and cash equivalents Short-term investments Receivables, net Merchandise inventories Prepaid expenses and other current assets. Total current assets. Net property and equipment.. Deferred income taxes and Other assets Total assets... Liabilities and Shareholders' Equity Current Liabilities Accounts payable Accrued salaries and benefits ..... Accrued expenses and other current liabilities Total current liabilities.. Long-term debt $ 282,220 $ 358,260 165,125 279.232 76,962 80,461 351,395 370,507 103,055 114.296 978,757 1,202,756 813.768 796,029 160,255 161.730 $1.952,780 $2,160,515 $ 128,246 $144,414 36,058 54.799 195,910 187,431 360,214 $ 386.644 291,663 284,773 671,417 651,877 Deferred rent and other liabilities Total liabilities .... Commitments and Contingencies Equity Preferred stock $.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding Common stock $.0001 par value; 200,000,000 shares authorized; 105,642,283 and 108,248,568 shares issued and outstanding Additional paid-in capital Retained earnings .... Total stockholders' equity Total Liabilities and Equity 11 11 $ O $ 684 1.489,087 1.300.208 1,489,098 1,300,90 $2,160,515 $1,952,780 Source: Urban Outfitters, Inc., 2019 10-K