Comparing the Annual Financial Statements of H&M and A&F

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The big problem with H&M's annual report is that it does not contain financial statements. In order to acquire balance sheet figures, the latest quarterly financial report has been acquired. The H&M balance sheet does not disclose anything about the types of equity the company has. The Abercrombie and Fitch balance sheet does. The book value of its Class A common stock is $1.033 million. The paid-in capital is $369 million, retained earnings are $2.32 billion and the accumulated other comprehensive income is $6.4 million. Neither company is known to have preferred shares outstanding. H&M does not break out its equity on the balance sheet, so if there are preferred shares this is not going to be known. Abercrombie simply does not have them. Abercrombie and Fitch has noted a profit of $796,000 on discontinued operations for the 2011 fiscal year. This was Ruehl, a branded store and direct-to-consumer operation that was slated for closure as far back as 2009. H&M does not make note of any discontinued operations on its latest financial statements. It is assumed, then, that there are none, since there is a reference to Current Operations, but none to Discontinued Operations. Not surprisingly, the H&M report does not make note of stock compensation plans. In contrast, GAAP requires that Abercrombie and Fitch make note of any such plans. The figures associated with these are found on the Statement of Shareholders' Equity and the Statement of Cash Flows. Note 4 (p.73)

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