Comparing Income Statements and Balance Sheets ofCompetitors
Following are selected income statement and balance sheet data fromtwo retailers: Abercrombie & Fitch (clothing in the high-endmarket) and TJX Companies (clothing retailer in the value pricedmarket), for the fiscal year ended January 30, 2016.
(a) Express each income statement amount as a percentage ofsales.
Round your answers to one decimal place (ex: 0.2345 = 23.5%)
Income Statement |
|---|
($ thousands) | ANF | | | TJX | |
|---|
Sales | $3,518,680 | | | $30,944,938 | |
Cost of goods sold | 1,361,137 | Answer% | | 22,034,523 | Answer% |
Gross profit | 2,157,543 | Answer% | | 8,910,415 | Answer% |
Total expenses | 2,121,967 | Answer% | | 6,632,757 | Answer% |
Net income | $ 35,576 | Answer% | | $2,277,658 | Answer% |
(b) Express each balance sheet amount as a percentage of totalassets.
Round your answers to one decimal place (ex: 0.2345 =23.5%).
Balance Sheet |
|---|
($ thousands) | ANF | | | TJX | |
|---|
Current assets | $1,178,980 | Answer% | | $6,772,560 | Answer% |
Long-term assets | 1,254,059 | Answer% | | 4,726,922 | Answer% |
Total assets | $2,433,039 | | | $11,499,482 | |
| | | | | |
Current liabilities | $534,703 | Answer% | | $4,402,230 | Answer% |
Long-term liabilities | 602,614 | Answer% | | 2,790,177 | Answer% |
Total liabilities | 1,137,317 | Answer% | | 7,192,407 | Answer% |
Stockholders' equity | 1,295,722 | Answer% | | 4,307,075 | Answer% |
Total liabilities and equity | $2,433,039 | | | $11,499,482 | |
Which of the following statements about business models is mostconsistent with the computations for part (a)?
ANF's expenses as a percentage of sales are higher because itspends more on advertising than does TJX.
ANF is a high-end retailer that is able to charge high pricesfor its products, but bears substantial operating costs to supportits "shopping experience."
ANF's profit is higher than TJX's as a percentage of salesbecause its sales are higher than TJX's.
ANF's gross profit is higher than TJX's because its sales volumeallows it to manufacture clothes at a lower per unit cost than canTJX.
Which of the following statements about business models is mostconsistent with the computations for part (b)?
ANF reports lower current assets as a percentage of total assetsbecause it pays its vendors on a more timely basis than doesTJX.
ANF reports higher long-term assets as a percentage of totalassets because it depreciates its long-term assets more slowly thandoes TJX.
ANF reports lower current assets and higher long-term assets asa percentage of total assets because it carries less inventory andhas a greater capital investment in its stores than does TJX.
ANF reports lower current assets as a percentage of total assetsbecause it is a smaller company and cannot afford the investment ininventory.
(c) Which company has a lower proportion of debt? What do theratios tell us about relative riskiness of the two companies?
ANF has a lower proportion of debt than does TJX, which impliesthat ANF is less risky than TJX.
TJX has a lower proportion of debt than does ANF, which impliesthat TJX is less risky than ANF.
ANF has a higher proportion of debt than does TJX, which impliesthat ANF is less risky than TJX.
TJX has a higher proportion of debt than does ANF, which impliesthat TJX is less risky than ANF.
