CP3-2 Finding Financial Information LO3-2, 3-4, 3-6 Refer to the financial state
ID: 2653466 • Letter: C
Question
CP3-2 Finding Financial Information LO3-2, 3-4, 3-6 Refer to the financial statements of Urban Outfitters in Appendix C at the end of the book. Required: 1. What is the company's revenue recognition policy? (Hint: Look in the notes to the financial statements.) Revenue is recognized at the point of sale or when merchandise is shipped to the customers for wholesale or direct to consumer sales. Revenue is recognized at the complation of a job or servic e for landscape sales. 2. Assuming that $50 million of cost of sales was due to noninventory purchase expenses (distribution and occupancy costs), how much inventory did the company buy during the year? (Hint: Use a T-account of inventory to infer how much was purchased.) INVENTORY (in thousands) Inventory purchased during the year: 3. Calculate selling, general, and administrative expenses as a percent of sales for each year presented. (Dollars in thousands.) Year Ended SG&A Expenses / Net Sales Revenue = Percentage 2012 2011 2010 By what percent did these expenses increase or decrease from fiscal years ended 2011 and 2012 and between 2010 and 2011? (Hint: Percentage Change = [Current Year Amount Prior Year Amount]/Prior Year Amount.) % Change Incr. or Decr. Between years ended 2011 and 2012: Between years ended 2010 and 2011: 4. Compute the company's net profit margin for each year presented. (Dollars in thousands.) Fiscal Year Ended Net Income / Net Sales (or Operating) Revenues = Net Profit Margin Ratio 2012 2011 2010 Explain net profit margin ratio and discuss the results shown above. CP3-2 Finding Financial Information LO3-2, 3-4, 3-6 Refer to the financial statements of Urban Outfitters in Appendix C at the end of the book. Required: 1. What is the company's revenue recognition policy? (Hint: Look in the notes to the financial statements.) Revenue is recognized at the point of sale or when merchandise is shipped to the customers for wholesale or direct to consumer sales. Revenue is recognized at the complation of a job or servic e for landscape sales. 2. Assuming that $50 million of cost of sales was due to noninventory purchase expenses (distribution and occupancy costs), how much inventory did the company buy during the year? (Hint: Use a T-account of inventory to infer how much was purchased.) INVENTORY (in thousands) Inventory purchased during the year: 3. Calculate selling, general, and administrative expenses as a percent of sales for each year presented. (Dollars in thousands.) Year Ended SG&A Expenses / Net Sales Revenue = Percentage 2012 2011 2010 By what percent did these expenses increase or decrease from fiscal years ended 2011 and 2012 and between 2010 and 2011? (Hint: Percentage Change = [Current Year Amount Prior Year Amount]/Prior Year Amount.) % Change Incr. or Decr. Between years ended 2011 and 2012: Between years ended 2010 and 2011: 4. Compute the company's net profit margin for each year presented. (Dollars in thousands.) Fiscal Year Ended Net Income / Net Sales (or Operating) Revenues = Net Profit Margin Ratio 2012 2011 2010 Explain net profit margin ratio and discuss the results shown above.Explanation / Answer
Answer:
Revenue is recognized at the point of sale or when merchandise is shipped to the customers for wholesale or direct to consumer sales. Revenue is recognized at the completion of a job or service e for landscape sales.
3. Calculate selling, general, and administrative expenses as a percent of sales for each year presented. (Dollars in Millions.)
Year Ended
SG&A Expenses /
Net Sales Revenue
= Percentage
2012
747
2474
30.19
2011
447
2274
19.66
2010
522
1938
26.93
By what percent did these expenses increase or decrease from fiscal years ended 2011 and 2012 and between 2010 and 2011?
(Hint: Percentage Change = [Current Year Amount Prior Year Amount]/Prior Year Amount.)
% Change
Incr. or Decr.
Between years ended 2011 and 2012:
{(447-522)/522}= (-0.14)
Between years ended 2010 and 2011:
{(747-447)/447}= 0.67
4. Compute the company's net profit margin for each year presented. (Dollars in Millions.)
Fiscal Year Ended
Net Income /
Net Sales (or Operating) Revenues
= Net Profit Margin Ratio
2012
185
285
64.91
2011
273
414
65.94
2010
220
339
64.90
3. Calculate selling, general, and administrative expenses as a percent of sales for each year presented. (Dollars in Millions.)
Year Ended
SG&A Expenses /
Net Sales Revenue
= Percentage
2012
747
2474
30.19
2011
447
2274
19.66
2010
522
1938
26.93
By what percent did these expenses increase or decrease from fiscal years ended 2011 and 2012 and between 2010 and 2011?
(Hint: Percentage Change = [Current Year Amount Prior Year Amount]/Prior Year Amount.)
% Change
Incr. or Decr.
Between years ended 2011 and 2012:
{(447-522)/522}= (-0.14)
Between years ended 2010 and 2011:
{(747-447)/447}= 0.67
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