Chapter 3, Problem 3.2CP

Finding Financial Information

Refer to the financial statements of Urban Outfitters in Appendix C at the end of the book.

Required:

1. 1. What is the company's revenue recognition policy? (Hint: Look in the notes to the financial statements.)
2. 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.)
3. 3. Calculate selling, general, and administrative expenses as a percent of sales for each year presented. By what percent did these expenses increase or decrease from fiscal years ended 2014 and 2015 and between 2013 and 2014? (Hint: Percentage Changes [Current Year Amount - Prior Year Amount] + Prior Year Amount.)
4. 4. Compute the company’s net profit margin for each year presented and explain its meaning.