Required information Ratio Analysis-Urban Outfitters Read the overview below and complete the activities that follow. Assessing how well a company's strategy is presently working involves evaluating the strategy from a qualitative standpoint and a quantitative standpoint. The stronger a company's current overall performance, the less likely the need for radical strategy changes. The weaker a company's performance, the more its current strategy must be questioned. The goal of this exercise is for you to understand how well a company's strategy is working based on its financial results. Before completing this exercise, be sure to review Chapter 4, "Evaluating a Company's 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 company's financial performance and balance sheet strength. You will also need the Urban Outfitters financial statements presented below. Consolidated Income Statements for Urban Outfitters, Inc., 2018-2019 (in thousands, except per share data) 2018 2019 Net sales (total revenue) $3,616,014 $3,950,623 Cost of sales 2,440,507 2,603,911 Selling, general, and administrative. 915.615 965,399 Operating income $259,892 $381,313 Other income (expense).. Other expenses.. (4,840) (6,325) Interest income and other, net 6,314 10.565 Income before income taxes.. 261,366 385,553 Provision for income taxes 153,103 87,550 Net income $108,263 $298,003 Basic earnings per share $ 0.97 $ 2.75 $ 0.96 $ 2.72 Diluted earnings per share Source: Urban Outfitters, Inc, 2019. Basic earnings per share. Diluted earnings per share Source: Urban Outfitters, Inc., 2019. $ 0.96 $ 2.72 Consolidated Balance Sheets for Urban Outfitters, Inc., 2018-2019 (in thousands, except per share data) Assets Current Assets Cash and cash equivalents Short-term investments January 31, January 31, 2018 2019 $282,220 $ 358,200 165,125 279,232 Receivables, net 76,962 80,461 Merchandise inventories 351,395 370,507 Prepaid expenses and other current assets. 103,055 114.296 Total current assets. 978.757 1,202,756 Net property and equipment. 813,768 796,029 Deferred income taxes and Other assets 160,255 161,730 Total assets... $1.952,780 $2,160,515 Liabilities and Shareholders' Equity Current Liabilities Accounts payable. $128.246 $ 144,414 Accrued salaries and benefits. Accrued expenses and Other current liabilities. Total curent Sabilities... 195.910 Long-term debt Deferred rent and other abilities 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. Source Urban Ouers, Inc, 2015 10 $ 36,058 54,799 187.431 360,214 $306,644 284,773 291.663 671,417 651.877 0 11 11 05 684 1,489,087 1,300,208 1,489,098 1,300,90 $2,160.515 $1,952,780 13 and outstanding Additional paid-in capital. Retained earnings.. Total stockholders' equity Total Liabilities and Equity Source Urban Outos, c. 2019 10K 684 1,400.087 1300,208 1,489,098 1,300,00 $2,160,515 $1,952,780 Calculate the following ratios for Urban Outfitters for both 2018 and 2019. Be sure to report items (a) through (e) in percentages (l.e.. multiply your result 100). x a. Gross profit margin b. Operating profit margin c. Net profit margin d. Return on stockholders' equity e. Return on assets f. Debt-to-equity ratio g. Days of inventory h. Inventory turnover ratio 1. Average collection period (Round your answer to 1 decimal place.) Ratios 2018 2019 a. Gross Profit Margin (%) 32.5 % 34.1 % b. Operating Profit Margin (%) 7.2 % 9.7 % C Net Profit Margin (%) 3.0 % 7.5 % d. Return on Shareholder Equity (%) 7.3% 22.9 % e. Return on Assets (%) 5.54 % 13.8 % f. Debt-to-Equity Ratio 0.5 0.5 Days of Inventory 52.6 51.9 h. Inventory Turnover 7.0 7.2 L Average Collection Period 7.8 7.3 From 2018 to 2019, Urban Outfitters' gross profit margins showed a(n) Multiple Choice favorable decrease. unfavorable increase. unfavorable decrease favorable increase neither a favorable nor an unfavorable increase or decrease. From 2018 to 2019, Urban Outfitters' return on shareholder equity showed a(n) Multiple Choice unfavorable decrease. favorable decrease. neither a favorable nor an unfavorable increase or decrease. unfavorable increase. favorable increase. erences From 2018 to 2019, Urban Outfitters' return on assets showed a(n) Multiple Choice favorable increase. unfavorable decrease. unfavorable increase.. favorable decrease neither a favorable nor an unfavorable increase or decrease Total Liabilities and Equity. Source: Urban Outers, Inc. 2019 10x $2,160,515 $1,952,780 From 2018 to 2019, Urban Outfitters' debt-to-equity ratio showed a(n) Multiple Choice neither a favorable nor an unfavorable increase or decrease favorable decrease unfavorable decrease. unfavorable increase favorable increase. S G Totalbes 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 d and outstanding Additional paid-in capital Retained earings, Total stuckholders' equity 671.417 651.877 11 604 1480087 1.300.200 1,400,000 1,300,00 Total Liabilities and Equity Source Urban Our Inc. 2019 10- $2,160,515 $1,952,700 From 2018 to 2019, Urban Outfitters' inventory turnover ratios showed a(n) Multiple Choice favorable decrease unfavorable decrease. favorable increase neither a favorable nor an unfavorable increase or decrease unfavorable increase. 9 < Prev 6 7 of 7 Next > From 2018 to 2019, Urban Outfitters' average collection period showed a(n) Multiple Choice unfavorable Increase. unfavorable decrease. favorable decrease. favorable increase. neither a favorable nor an unfavorable increase or decrease < Prev 7 of 7 Next