The following data were taken from the 2007 and 2006 financial statements of American Eagle Outfitters. (All dollars are in thousands.)

Instructions
Perform each of the following.
(a) Calculate the debt to total assets ratio for each year.
(b) Calculate the free cash flow for each year.
(c) Discuss American Eagle's solvency in 2007 versus 2006.
(d) Discuss American Eagle's ability to finance its investment activities with cash provided by operating activities, and how any deficiency would bemet.

Transcribed Image Text:

2007 2006 Current assets Total assets Current labitics Total liabilitics Total stockholders' equity Cash provided by operating activitics Capital expenditures Dividends paid $1,198,254 $1,076,781 1,605,649 351,487 450,097 1,417,312 1,155,552 480,419 81,545 42,058 1,987,484 460,464 570,172 749,268 225,939 61,521