Comparing Annual Reports of Abercrombie & Fitch and H&M

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On the balance sheet, H&M lists the following elements of shareholder equity: share capital, reserves, retained earnings and profit for the year. Abercrombie & Fitch lists common stock, paid-in capital, retained earnings, accumulated other comprehensive income and treasury stock. Neither company has preferred shares outstanding. ANF reports treasury shares, but does not disclose in the notes the reason for reacquiring these shares. On the income statement, the basic and diluted earnings per share for ANF were $1.47 and $1.43 respectively. For H&M, there is no differentiation on the company's income statement between basic and diluted earnings per share. EPS is simply reported as 9.56 Swedish crowns, which at today's exchange rate is $1.35 USD. H&M does not note any discontinued operations in the past year, but ANF does. For ANF, income from discontinued operations was $796 million. Neither company discloses stock compensation plans on the income statement. ANF notes elsewhere in the annual report that it values the fair value of share-based compensation awards using the straight-line method. H&M does not appear to discuss equity based compensation in its annual report. The value of this expense is not disclosed. The ratios for the two companies are as follows: A&F H&M Gross margin 60.5% 51.3% Net margin 3.1% 12.3% ROE 6.8% 35.8% Current ratio 2.1 2.7 Quick ratio 1.3 1.7 Inventory Turnover 2.9x 3.2x Debt/Assets 0.39 0.26 Debt/Equity 0.64 0.36

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