l two years later on July 1, 2018, for $10,000. vice life on July 1, 2016. erica
ID: 2477572 • Letter: L
Question
l two years later on July 1, 2018, for $10,000. vice life on July 1, 2016. erican Eagle Outfitters, Inc. Financial information for American Eagle is presented in Appendix A at t AP7-2 Financial infor end of the book. ndix A at the Required The summary of significant accounting policies is located in note 2 to the financia . The summary of significant accounting policies is located in statements. Locate the section on property and equipment. What depreciation method does American Eagle use? What are the estimated useful lives for buildings, leasehold improvements, and fixtures and equipment? 2. Find note 7 entitled Property and Equipment. What are the cost and the book value of property and equipment? What is the trend in depreciation expense for the past three years? Find note 10 entitled Leases. Retail stores, like American Eagle, tend to lease rather than buy their stores. What is the most common term for the store leases? What are the future minimum lease obligations under operating leases at February 2, 2013? The Buckle, Inc. for Buckle is presented in Appendix B at the end ofExplanation / Answer
AP7-4:
1.
American Eagle:
Return on assets:
Return on assets = Annual net income/Average total assets
Average total assets = Beginning total assets + Ending total assets/2
= $1,950,802 + $1,756,053/2
= $3,706,855/2
= $1,853,428
Note: Beginning is 2012’s balance and ending is 2013’s balance.
Return on assets = Annual net income/Average total assets
= $232,108/$1,853,428
= 0.1252 or 12.52%
Therefore, the return on assets is 12.52%.
Profit margin:
Profit margin = Net income/Net sales
= $232,108/$3,475,802
= 0.0668 or 6.68%
Therefore, the profit margin ratio is 6.68%.
Assets turnover ratio:
Assets turnover ratio = Net sales/Average total assets
= $3,475,802/$1,853,428
= 1.8753
Therefore, assets turnover ratio is 1.8753
2.
Buckle:
Return on assets:
Return on assets = Annual net income/Average total assets
Average total assets = Beginning total assets + Ending total assets/2
= $531,539 + $477,974/2
= $1,009,513/2
= $504,756.5
Return on assets = Annual net income/Average total assets
= $164,305/$504,756.5
= 0.3255 or 32.55%
Therefore, the return on assets is 32.55%.
Profit margin:
Profit margin = Net income/Net sales
= $164,305/$1,124,007
= 0.1462 or 14.625
Therefore, the profit margin ratio is 14.625%.
Assets turnover ratio:
Assets turnover ratio = Net sales/Average total assets
= $1,124,007/$504,756.5
= 2.227
Therefore, assets turnover ratio is 2.227.
3.
The return on assets ratio 12.52% of American eagle Company is less compare to Buckle’s company return on assets of 32.55%, so company Buckle is doing better based on return on assets.
Company Buckle has the highest profit margin of 14.625% compare to American eagle’s company at 6.68%.
Company Buckle has the highest assets turnover at 2.227 compare to American eagle’s company at 1.8753.
Note: As per the Chegg procedures, only one question is answered when multiple questions are asked.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.