Financial Accounting - Access
4th Edition
ISBN: 9781259958533
Author: SPICELAND
Publisher: MCG
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Textbook Question
Chapter 9, Problem 9.4APCA
American Eagle Outfitters, Inc., vs. The Buckle, Inc.
Financial information for American Eagle is presented in Appendix A at the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book.
Required:
1. Calculate the debt to equity ratio for American Eagle and Buckle for the most recent year. Which company has the better ratio? Compare your calculations with those for Coca-Cola and PepsiCo reported earlier in the chapter. Which industry maintains a higher debt to equity ratio?
2. Calculate the return on assets for American Eagle and Buckle for the most recent year. Which company appears more profitable?
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Certain financial ratios for The Gap for its most recent year are given below, along with the average ratios for its industry. Based on those ratios, answer the following.
1) Does The Gap seem to prefer to finance its assets with debt or with equity? How can you tell? What percent of its assets are funded with debt? What percent of its assets are funded with equity?
2) A supplier to The Gap sells merchandise to The Gap and asks to be paid within 60 days. While any of The Gap’s financial ratios might be of interest to the supplier, which of the ratios listed below do you think would likely be the most important one to the supplier? Why?
3) Which of the ratios presented suggest that, compared to its industry, The Gap may have a problem controlling its operating expenses? How can you tell? Your answer should clearly indicate that you understand why the ratio that you chose answers this question.
Here is the data for The Gap and its industry.
Financial Ratios…
At the end of the current year, the following information is available for both Pulaski Company and Scott Company.
Pulaski Company
Scott Company
Total assets
$
860,000
$
440,000
Total liabilities
360,000
240,000
Total equity
500,000
200,000
Required:1. Compute the debt-to-equity ratios for both companies.2. Which company has the riskier financing structure?
Complete this question by entering your answers in the tabs below.
Required 2
Compute the debt-to-equity ratios for both companies.
Choose Numerator:
/
Choose Denominator:
/
Debt-to-Equity Ratio
Pulaski Company
/
=
Scott Company
/
=
At the end of the current year, the following information is available for both Pulaski Company and Scott Company.
Pulaski Company
Scott Company
Total assets
$
2,287,500
$
1,156,500
Total liabilities
871,500
565,500
Total equity
1,416,000
591,000
1. Compute the debt-to-equity ratios for both companies.2. Which company has the riskier financing structure?
Chapter 9 Solutions
Financial Accounting - Access
Ch. 9 - What is capital structure? How do the capital...Ch. 9 - Prob. 2RQCh. 9 - How do interest expense and the carrying value of...Ch. 9 - Prob. 4RQCh. 9 - What are bond issue costs? What is an underwriter?Ch. 9 - Why do some companies issue bonds rather than...Ch. 9 - Prob. 7RQCh. 9 - What are convertible bonds? How do they benefit...Ch. 9 - How do we calculate the issue price of bonds? Is...Ch. 9 - Prob. 10RQ
Ch. 9 - If bonds issue at a discount, is the stated...Ch. 9 - Prob. 12RQCh. 9 - Prob. 13RQCh. 9 - Prob. 14RQCh. 9 - 15.If bonds issue at a discount, what happens to...Ch. 9 - Prob. 16RQCh. 9 - Prob. 17RQCh. 9 - Prob. 18RQCh. 9 - 19.If bonds with a face value of 250,000 and a...Ch. 9 - Prob. 20RQCh. 9 - Prob. 9.1BECh. 9 - Prob. 9.2BECh. 9 - Calculate the issue price of bonds (LO95) Ultimate...Ch. 9 - Calculate the issue price of bonds (LO95) Ultimate...Ch. 9 - Calculate the issue price of bonds (LO95) Ultimate...Ch. 9 - Prob. 9.6BECh. 9 - Prob. 9.7BECh. 9 - Prob. 9.8BECh. 9 - Prob. 9.9BECh. 9 - Record bond issue and related annual interest...Ch. 9 - Record bond issue and related annual interest...Ch. 9 - Prob. 9.12BECh. 9 - Prob. 9.13BECh. 9 - Prob. 9.14BECh. 9 - Prob. 9.15BECh. 9 - Prob. 9.16BECh. 9 - Prob. 9.17BECh. 9 - Calculate ratios (LO98) Surfs Up, a manufacturer...Ch. 9 - Prob. 9.1ECh. 9 - Prob. 9.2ECh. 9 - Compare operating and capital teasel (LO93, LO98)...Ch. 9 - listed below are terms and definitions associated...Ch. 9 - Prob. 9.5ECh. 9 - Prob. 9.6ECh. 9 - Prob. 9.7ECh. 9 - Prob. 9.8ECh. 9 - Prob. 9.9ECh. 9 - Prob. 9.10ECh. 9 - Prob. 9.11ECh. 9 - Prob. 9.12ECh. 9 - Prob. 9.13ECh. 9 - Prob. 9.14ECh. 9 - Prob. 9.15ECh. 9 - Prob. 9.16ECh. 9 - Prob. 9.17ECh. 9 - Prob. 9.18ECh. 9 - (LO92, LO98) On January 1, 2018, the general...Ch. 9 - Record and analyze installment notes (LO92) On...Ch. 9 - Explore the impact of leases on the debt to equity...Ch. 9 - Prob. 9.3APCh. 9 - Prob. 9.4APCh. 9 - Understand a bond amortization schedule (LO96) On...Ch. 9 - Prob. 9.6APCh. 9 - Calculate and analyze ratios (LO98) Selected...Ch. 9 - Prob. 9.1BPCh. 9 - Explore the impact of leases on the debt to equity...Ch. 9 - Prob. 9.3BPCh. 9 - Prob. 9.4BPCh. 9 - Prob. 9.5BPCh. 9 - Prob. 9.6BPCh. 9 - Calculate and analyze ratios (LO98) Selected...Ch. 9 - Prob. 9.1APCPCh. 9 - Prob. 9.2APFACh. 9 - The Buckle, Inc. Financial information for Buckle...Ch. 9 - American Eagle Outfitters, Inc., vs. The Buckle,...Ch. 9 - Ethics The Tony Hawk Skate Park was built in early...Ch. 9 - Prob. 9.7APWCCh. 9 - Prob. 9.8APEM
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