Directions
Required Other info
Balance Sheet Industry Ratios
Income Statement
Ratio Analysis
Group Project – Part 2
Continuing with our hypothetical retail company from Part 1, imagine now that the start-up company from Part 1 is American Eagle Outfitters (stock symbol: AEO). Assume now that you are an investment analyst* who focuses on the retail industry.
The FY 2017 (As of Fe
uary 3, 2018) Balance Sheet and Income Statement for AEO and Industry Ratio Report is provided. Download the fiscal year 2018 ("FY 2018" - as of Fe
uary 2, 2019) American Eagle Outfitters ("AEO") annual report and form 10-K from https:
investors.ae.com/financials-filings/default.aspx and complete the following steps:
1. Update the Balance Sheet and Statement of Operations for FY 2018.
2. Compute financial ratios for FY 2018 and FY 2017.
3. Compute changes in ratios on a Year-over-Year basis.
4. Compute difference between FY 2018 and industry average ratios.
5. Write a BRIEF (limit of one-page, double-spaced, 12-point font) report summarizing the ratio analysis, focusing on describing what the ratios indicate overall and what the YoY changes and differeces from industry averages indicate about AEO.
You will submit this Excel Template (steps 1-4) and a Word document (step 5).
*Investment analysts collect financial information and analyze investments such as stocks and bonds. Analysts provide recommendations and investing advice to the investing public and often focus on a particular industry in order to provide expert advice in the chosen area.
AEO Balance Sheets
AMERICAN EAGLE OUTFITTERS, INC. Part 2 Home
CONSOLIDATED BALANCE SHEETS
Fe
uary 2, Fe
uary 3,
(in thousands, except per share amounts) 2019 2018
ASSETS
Cu
ent assets:
Cash and cash equivalents $ 413,613
Merchandise inventory 398,213
Accounts receivable, net 78,304
Prepaid expenses and other 78,400
Total cu
ent assets - 968,530
Property and equipment, net of accumulated depreciation 724,239
Intangible assets, net of accumulated amortization 46,666
Goodwill 15,070
Defe
ed income taxes 9,344
Other assets 52,464
Total assets $ - $ 1,816,313
LIABILITIES AND STOCKHOLDERS' EQUITY
Cu
ent liabilities:
Accounts payable $ 246,204
Accrued compensation and payroll taxes 54,184
Accrued rent 78,619
Accrued income and other taxes 12,220
Unredeemed gift cards and gift certificates 52,966
Cu
ent portion of defe
ed lease credits 12,780
Other liabilities and accrued expenses 36,810
Total cu
ent liabilities - 493,783
Non-cu
ent liabilities:
Defe
ed lease credits 45,114
Non-cu
ent accrued income taxes 4,537
Other non-cu
ent liabilities 34,657
Total non-cu
ent liabilities - 84,308
Commitments and contingencies - -
Stockholders’ equity:
Prefe
ed stock, $0.01 par value; 5,000 shares authorized; none issued and outstanding - -
Common stock, $0.01 par value; 600,000 shared authorized; 249,566 and 249,566 shares
issued; 177,316 and 181,886 shares outstanding , respectively 2,496
Contributed capital 603,890
Accumulated other comprehensive loss, net of tax (36,462)
Retained earnings 1,775,775
Treasury stock, 72,250 and 67,680 shares, respectively, at cost (1,141,130)
Total stockholders' equity - 1,204,569
Total liabilities and stockholders’ equity $ - $ 1,782,660
AEO Statement of Operations
AMERICAN EAGLE OUTFITTERS, INC. Part 2 Home
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended
Feburary 2 Fe
uary 3
(In thousands, except per share amounts) 2019 2018
Total net revenue $ 3,795,549
Cost of sales, including certain buying, occupancy and warehousing expenses 2,425,044
Gross profit - 1,370,505
Selling, general and administrative expenses 879,685
Impairment and restructuring charges 20,611
Depreciation and amortization expense 167,421
Operating income - 302,788
Other (expense) income, net (15,615)
Income before income taxes - 287,173
Provision for income taxes 83,010
Income from continuing operations - 204,163
Discontinued operations, net of tax - -
Net income $ - $ 204,163
AEO Ratios
AMERICAN EAGLE OUTFITTERS, INC. Part 2 Home
Ratio Analysis
For the Years Ended
Fe
uary 2, Fe
uary 3, Year-over-Year Industry FY 2018 vs
2019 2018 Change Ratios Industry
Liquidity
Cu
ent Ratio 1.52
Activity
Inventory Turnover - 0 6.41 6.36
Days to Sell Inventory 57.390
Receivables Turnover 106.12
Average Collection Period 3.44
Fixed Asset Turnover 5.79
Total Asset Turnover 1.93
Accounts Payable Turnover 14.60
Profitability
Gross Profit Margin 34.94%
Net Profit Margin 3.85%
Return on Equity 12.57%
Return on Assets 7.44%
Leverage
Debt-to-Equity 0.70
Dividends
Dividend Yield 2.59%
Please use Excel formulas to calculate ratios. Inventory Turnover given as an example. Click fx in the formula bar to
ing up the Formula Builder.
If FY 2016 financial information is needed for a ratio, you can find it in the annual reports at https:
investors.ae.com/financials-filings/default.aspx.
Industry Ratio Report
INDUSTRY RATIO REPORT Part 2 Home
Retail Family Clothing Stores
Liquidity COMPANIES USED IN INDUSTRY ANALYSIS
Quick Ratio 1.52 Company Name Ticker Symbol
American Eagle Outfitters, Inc. AEO
Activity Buckle, Inc. BKE
Inventory Turnover 6.36 The Cato Corporation CATO
Days to Sell Inventory 57.390 Chico's FAS Inc. CHS
Receivables Turnover 106.12 days Express, Inc. EXPR
Average Collection Period 3.44 Francesca's Holdings Corporation FRAN
Fixed Asset Turnover 5.79 days The Gap, Inc. GPS
Total Asset Turnover 1.93 Tilly's, Inc. TLYS
Accounts Payable Turnover 14.60 U
an Outfitters, Inc. URBN
Zumiez, Inc. ZUMZ
Profitability
Gross Profit Margin 34.94%
Net Profit Margin 3.85%
Return on Equity 12.57%
Return on Assets 7.44%
Leverage
Debt-to-Equity 0.70
Dividends
Dividend Yield 2.59%