Refer to the financial stateme

Refer to the of Abercrombie & Fitch and Aeropostale that are supplied with this text.

Required:

Answer the following questions:

1. Does each company apply the revenue recognition principle to sales to customers and to gift cards in the same manner?

2. Which accounts on the and income statement of each company may require adjusting entries?Would these accounts require accruals or deferrals?

3. How much would Abercrombie & Fitch credit to Income Summary for the year ending February 3, 2007 (fiscal 2006)? How much would Aeropostale credit to Income Summary for the fiscal year ending February 3, 2007? How much would Abercrombie & Fitch debit to Income Summary for the year ending February 3, 2007 (fiscal 2006)? How much would Aeropostale debit to Income Summary for the fiscal year ending February 3, 2007?

4. How much did each company report as an accrued expense for gift cards for the most recent year? Explain why this amount is reported as a liability.

5. Compare how much each company reported as income tax expense and as cash paid for taxes for the most recent year. Why are the amounts different and where would this difference be reported on the financial statements?

 
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Refer to the financial stateme

Refer to the of Abercrombie & Fitch and Aeropostale that are supplied with this text.

Required:

Answer the following questions:

1. Determine the amounts in the accounting equation for the year ending February 3, 2007 for each company. Does the accounting equation balance?

2. Set up a T-account for Abercrombie & Fitch’s account and include the beginning and ending balances. Complete the T-account to reflect the sales and cash collections for the year. Assume all sales are on account.

3. Provide the journal entry to record the following two events and post the amount to the T-account. For simplicity, assume the event was recorded in a single journal entry.

a. What journal entry is necessary to record Abercrombie & Fitch’s net sales for the year ending February 3, 2007? Assume that all sales were made on account.

b. What journal entry is necessary to record Abercrombie & Fitch’s cash collections from customers during the year ending February 3, 2007?

4. Where does Abercrombie & Fitch and Aeropostale report credit card receivables?

5. Provide the journal entry to record the amount of selling, general, and administrative expenses incurred during the year ending February 3, 2007 (fiscal 2006).

Assume all expenses incurred during the year were paid during the year. Why are Aeropostale’s selling, general, and administrative expenses smaller than Abercrombie & Fitch’s selling, general, and administrative expenses?

 
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Refer to the financial stateme

Refer to the of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book, or download the annual reports from the Cases section in the Connect library.

Required:

1. Which of the two basic reporting approaches for the cash flows from operating activities did Lowe’s use? Is this the same as what The Home Depot used?

2. What amount of cash did Lowe’s receive from issuing long- term debt during the year ended January 31, 2014?

3. In the fiscal year ended January 31, 2014, Lowe’s generated $ 4,111 million from operating activities. Where did Lowe’s spend this money? List the two largest cash outflows reported in the investing or financing activities sections. Do Lowe’s uses differ significantly from The Home Depot’s for the same period?

 
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Refer to the financial stateme

Refer to the of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book, or download the annual reports from the Cases section in the Connect library.

Required:

1. The number of issued shares are shown in the first column of the statement of stockholders’ equity. Had Lowe’s issued more or fewer shares of than The Home Depot at the beginning of February 2014?

2. From the Retained Earnings column in the statement of stockholders’ equity, what total amount of cash dividends did Lowe’s declare during the year ended January 31, 2014? Com-pared to The Home Depot, is Lowe’s policy on dividends better, worse, or just different?

3. How have Lowe’s net earnings changed over the past three years? How has the company’s basic earnings per share changed over the past three years? Is the change in EPS driven solely by the change in earnings, or were they also influenced by changes in the number of shares issued and outstanding? Consider the first column of the statement of stockholders’ equity.

 
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Refer to the financial stateme

Refer to the of Abercrombie & Fitch and Aeropostale that are supplied with this text.

Required:

Answer the following questions:

1. What is the fiscal year-end of Abercrombie & Fitch? Of Aeropostale? Why would you expect these to be the same?

2. With regard to the balance sheet:

a. What amounts did each company report for assets, liabilities, and stockholders’ equity for the year ended February 3, 2007?

b. What amounts were reported as current assets and current liabilities for the year ended February 3, 2007?

c. Assess the liquidity of each company.

d. Describe any other similarities and differences that you noticed between the two companies.

3. With regard to the income statement:

a. What amounts did Abercrombie & Fitch report as revenues, expenses, and net income for the year ended February 3, 2007 (fiscal 2006)? What amounts did Aeropostale report as revenues, expenses, and net income for the fiscal year ended February 3, 2007?

b. Compare any trends that you detect with regard to revenues, expenses, and net income?

c. What are the earnings per share of each company? What insights does this give you with regard to future profitability and growth?

4. What were the major sources and uses of cash for each company?

5. What is management’s assessment of each company’s past performance and future prospects? Where did you find this information?

 
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Refer to the financial stateme

Refer to the of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book, or download the annual reports from the Cases section in the Connect library.
Required:
1. Calculate and express as a percentage, the companies’ debt-to-assets ratios using amounts reported in the for the year ending in early 2014. What do the differences in this ratio suggest about the companies’ reliance on creditors? Does it appear that Lowe’s or The Home Depot has a riskier financing strategy?
2. Calculate, to two decimal places, the companies’ times interest earned ratios for the years ending in early 2014. Does it appear that Lowe’s or The Home Depot will be better able to meet future interest obligations as they become payable?

 
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Refer to the financial stateme

Refer to the of The Home Depot in Appendix A at the end of this book, or download the annual report from the Cases section in the Connect library.
Required:
1. What is the amount of Accumulated Depreciation and Amortization at February 2, 2014? What percentage is this of the total cost of property and equipment?
a. $ 15,716; 40.2%
c. $ 1,627; 4.2%
b. $ 15,716; 67.3%
d. $ 1,627; 10.4%
2. What amount of Depreciation and Amortization Expense was reported for the year ended February 2, 2014? What percentage of net sales is it?
a. $ 15,716; 19.9%
c. $ 1,627; 2.1%
b. $ 15,716; 40.2%
d. $ 1,627; 4.2%
3. What is the fixed ratio for the year ended February 2, 2014?
a. 3.27
c. 3.32
b. 3.29
d. 3.38

 
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Refer to the financial stateme

Refer to the of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book, or download the annual reports from the Cases section in the Connect library.
Required:
1. What method of depreciation does Lowe’s use?
2. What is Lowe’s fixed ratio for the year ended January 31, 2014? Compare this ratio to that of The Home Depot for the same period and describe what it implies about the operations of the two companies.
3. Lowe’s estimated useful life of buildings is shorter than that estimated by The Home Depot . How will this affect the fixed ratios of the two companies?
4. What amount of Depreciation Expense was reported on Lowe’s income statement for the year ended ended January 31, 2014? What percentage of net sales is it? Compare this percentage to that of The Home Depot for the same period and describe what this implies about the two companies’ operations.

 
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Refer to the financial stateme

Refer to the of Abercrombie & Fitch and Aeropostale that are supplied with this text.

Required:
1. What amounts do Abercrombie & Fitch and Aeropostale report for inventories in its Consolidated Balance Sheets at February 3, 2007 and January 28, 2006?
2. Do Abercrombie & Fitch and Aeropostale use the same method to value its inventories?
3. What amount does Abercrombie & Fitch report for cost of goods sold for the years ending February 3, 2007, January 28, 2006, and January 29, 2005 (fiscal 2006, 2005, and 2004)? What amount does Aeropostale report for cost of goods sold for the years ending February 3, 2007, January 28, 2006, and January 29, 2005?
4. Compute the gross profit and s for fiscal year ending February 3, 2007, for each company? What do these ratios tell you about the success of each company in managing and controlling its inventory?
5. Do Abercrombie & Fitch and Aeropostale use the lower of cost market method to account for their inventories? By what amount have they written inventories down in the fiscal year ending February 3, 2007?

 
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Refer to the financial stateme

Refer to the and other data in Problem 16-11. Assume that you have just inherited several hundred shares of Modern Building Supply stock. Not being acquainted with the company, you decide to do some analytical work before making a decision about whether to retain or sell the stock you have inherited.
Required:
1. You decide first to assess the well-being of the common stockholders. For both this year and last year, compute the following:
a. The earnings per share.
b. The yield ratio for . The company’s is currently selling for $45 per share; last year it sold for $36 per share.
c. The payout ratio for .
d. The price-earnings ratio. How do investors regard Modern Building Supply as compared to other companies in the industry? Explain.
e. The book value per share of . Does the difference between market value and book value suggest that the stock at its current price is too high? Explain.
2. You decide next to assess the company’s rate of return. Compute the following for both this year and last year:
a. The return on total assets. (Total assets at the beginning of last year were $2,700,000.)
b. The return on common stockholders’ equity. (Stockholders’ equity at the beginning of last year was $1,786,000.)
c. Is the company’s financial leverage positive or negative? Explain.
3. Based on your analytical work (and assuming that you have no immediate need for cash), would you retain or sell the stock you have inherited? Explain.

 
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Refer to the financial stateme

Refer to the of The Home Depot in Appendix A at the end of this book, or download the annual report from the Cases section of the Connect library.
1. Where does the company disclose the amount of its Allowance for Doubtful Accounts?
a. On the income statement.
b. On the statement of cash flows.
c. On both the income statement and balance sheet.
d. In the notes to the Compute the company’s receivables turnover ratio and days to collect for the year ended February 2, 2014.
a. 54.9 times and 6.6 days
b. 36.8 times and 9.9 days
c. 12.0 times and 30.4 days
d. 56.4 times and 6.5 days

 
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Refer to the financial stateme

Refer to the of The Home Depot in Appendix A at the end of this book, or download the annual report from the Cases section in the Connect library.
1. How much inventory does the company hold on February 2, 2014? Does this represent an increase or decrease in comparison to the prior year?
a. $ 10,710, which is a decrease
b. $ 10,710, which is an increase
c. $ 11,057, which is a decrease
d. $ 11,057, which is an increase
2. What method(s) does the company use to determine the cost of its inventory? Describe where you found this information.
a. LIFO; Note 1
b. FIFO; Note 1
c. Weighted average cost; the
d. Specific Identification; Management’s Discussion and Analysis
3. Compute to one decimal place the company’s and days to sell for the year ended February 2, 2014.
a. 4.7 and 77.7
b. 4.8 and 76.0
c. 7.1 and 51.4
d. 7.2 and 50.7
4. Does the company believe FIFO, or weighted average cost, is a better method?
a. FIFO
b. Weighted average cost

 
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Refer to the financial stateme

Refer to the of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book, or download the annual reports from the Cases section in the Connect library.
1. Does Lowe’s hold more or less inventory than The Home Depot at the end of January 2014?
2. Does Lowe’s follow the lower of cost or market rule? What method does Lowe’s use to deter-mine the cost of its inventory? Comment on how this affects comparisons you might make between Lowe’s and The Home Depot’s s.
3. Compute to one decimal place Lowe’s and days to sell for the year ended January 31, 2014, and compare to The Home Depot’s. What does this analysis suggest to you?

 
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Refer to the financial stateme

Refer to the of Abercrombie & Fitch and Aeropostale that are supplied with this text.

Required:
Answer the following questions:
1. What method of computing net cash flow from operating activities did Abercrombie & Fitch use? What method of computing net cash flow from operating activities did Aeropostale use? Would you expect these to be the same? Why or why not?
2. Find net cash provided by operating activities for each company:
a. What was the amount of cash provided by operating activities for the year ending February 3, 2007 (fiscal 2006) for Abercrombie & Fitch? What was the amount of cash provided by operating activities for the year ending February 3, 2007, for Aeropostale?
b. What was the most significant adjustment that caused a difference between net income and net cash provided by operating activities?
c. Comparing net income to net cash provided by operating activities, can you draw any conclusions as to the quality of each company’s earnings?
3. Refer to each company’s investing and financing activities. What were some of the more significant uses of cash? What were some of the more significant sources of cash?
4. Refer Does each Company match the time commitments of inflows and outflows of cash well?
5. Refer Are debt and equity likely to be available as inflows of cash in the near future?

 
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Refer to the financial stateme

Refer to the of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book, or download the annual reports from the Cases section in the Connect library.
1. Does Lowe’s report higher or lower Net Sales than The Home Depot during the year ending nearest February 1, 2014?
2. Assuming that Cost of Sales is the same thing as Cost of Goods Sold, compute Lowe’s gross profit percentage for the fisacl years ending nearest February 1, 2014 and 2013. Is it greater or less than The Home Depot’s? Based on this, where are consumers likely to find lower markups?
3. Assume that Lowe’s and The Home Depot experienced no shrinkage in the most recent year. Using both companies’ balance sheets and income statements, estimate the amount of purchases in the ending nearest to February 1, 2014 year. How much greater (or less) were Lowe’s purchases than The Home Depot’s in that year?

 
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Refer to the financial stateme

Refer to the of The Home Depot in Appendix A at the end of this book, or download the annual report from the Cases section in the Connect library.
Required:
1. What amount of Net Sales does the company report during the year ended February 2, 2014?
a. $ 70,395
c. $ 5,385
b. $ 51,422
d. $ 78,812
2. Assuming that Cost of Sales is the company’s term for Cost of Goods Sold, compute the company’s gross profit percentage for the most recent two years.
a. 34.8% and 34.6%
c. 36.6% and 32.8%
b. 34.8% and 32.8%
d. 65.2% and 65.4%
3. Assume that The Home Depot experienced no shrinkage in the most current year. Using the and income statement, estimate the amount of purchases in the year ended February 2, 2014.
a. $ 45,130
c. $ 51,422
b. $ 51,769
d. $ 51,075

 
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Refer to the financial stateme

Refer to the of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book, or download the annual reports from the Cases section in the Connect library.

Required:

1. Did Lowe’s sales revenues increase or decrease in the year ended January 31, 2014, as com-pared to the previous year? By how much? Calculate this change as a percentage of the previous year’s sales revenues. Is the trend in Lowe’s sales revenues more or less favorable than The Home Depot’s?

2. State the amount of the largest expense on the income statement of Lowe’s for the year ended January 31, 2014, and describe the transaction represented by the expense. Did this expense increase or decrease and by what percentage, as compared to the previous year? Is the trend in Lowe’s largest expense more or less favorable than the trend for The Home Depot’s largest expense?

 
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Refer to the financial stateme

Refer to the of The Home Depot in Appendix A at the end of this book, or download the annual report from the Cases section in the Connect library.

Required:

1. How much did The Home Depot’s How much did The Home Depot’s sales revenue increase or decrease in the year ended February 2, 2014?

a. Decreased $ 4,058 (million)

c. Increased $ 4,058 (million)

b. Decreased $ 850 (million)

d. Increased $ 850 (million)

2. What is the largest expense on the income statement for the year ended February 2, 2014, and how much did it change from the previous year?

a. Cost of Sales, which decreased $ 2,779 (million)

b. Cost of Sales, which increased $ 2,510 (million)

c. Selling, General and Administrative Expenses, which decreased $ 1,400 (million)

d. Selling, General and Administrative Expenses, which increased $ 89 (million)

3. Which of the following was The Home Depot’s net profit margin in the year ended February 2, 2014?

a. $ 5,385

c. 6.8%

b. $ 3.78

d. 0.07%

 
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Refer to the financial stateme

Refer to the of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book, or download the annual reports from the Cases section in the Connect library.

Required:
1. Use the companies’ fiscal 2013 balance sheets to determine the amounts in the accounting equation (A = L + SE). Is Lowe’s or The Home Depot larger in terms of total assets?
2. Does Lowe’s have more or less current liabilities than The Home Depot at the end of fiscal 2013? Which company has a larger current ratio?
3. On the balance sheet, Lowe’s reports inventory of $ 9,127,000,000. Does this amount represent the expected selling price? Why or why not?
4. Has financing for Lowe’s investment in assets primarily come from liabilities or stockholders’ equity at January 31, 2014? For each company, calculate the percentage of total assets financed by total liabilities. Thinking back to Chapter 1, does this imply Lowe’s investors are taking on more, or less, risk than those investing in The Home Depot?

 
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Refer to the financial stateme

Refer to the of The Home Depot in Appendix A at the end of this book, or download the annual report from the Cases section in the Connect library.

Required:

1. On what dates did the company’s 2013 and 2012 fiscal years end?

Current Prior

A. January 31, 2014……… January 31, 2013

B. December 31, 2013… December 31, 2012

C. February 3, 2013……… February 2, 2012

D. February 2, 2014………. February 3, 2013

2. Which of the following are the amounts in the company’s accounting equation (A = L 1 SE) for the 2013 fiscal year end?

a. $ 15,279 + $ 23,348 = $ 40,518

b. $ 40,518 = $ 27,996 + $ 12,522

c. $ 41,084 = $ 23,307 + $ 17,777

d. $ 78,812 = $ 5,385 + $ 73,427

3. What is the company’s current ratio at February 2, 2014?

a. 0.38

b. 1.42

c. 0.70

d. 1.45

4. What does the company’s current ratio in requirement 3 indicate?

a. The company has more than one dollar of current assets for every dollar of liabilities due in the next year.

b. The company has less than one dollar of current assets for every dollar of liabilities due in the next year.

c. Less than half of the company’s assets are current.

d. Less than half of the company’s liabilities are current.

 
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Refer to the financial stateme

Refer to the of Abercrombie & Fitch and Aeropostale that are supplied with this text.

Required:

1. How much cash and equivalents and short-term investments (or marketable securities) did Aeropostale and Abercrombie & Fitch hold as a percentage of total assets at February 3, 2007, and January 28, 2006?

2. Speculate as to differences in cash management policies between the two companies.

3. Describe the change in the mix of cash and equivalents and marketable securities for Abercrombie & Fitch between 2006 and 2007. Speculate as to why this may have happened.

4. Locate the Audit Opinion and describe the criteria by which Abercrombie & Fitchs and Aeropostales internal control systems were evaluated.

 
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Refer to the financial stateme

Refer to the of The Home Depot for the 2013 fiscal year in Appendix A at the end of this book, or download the annual report from the Cases section in the Connect library. The Home Depot’s 2013 fiscal year runs from February 4, 2013, to February 2, 2014.

Required:

1. What amount of net income was reported (in millions) for the year ended February 2, 2014?

a. $ 23,180

b. $ 78,812

c. $ 27,390

d. $ 5,385

2. What amount of sales revenue ( in millions) was earned for the year ended February 2, 2014?

a. $ 23,180

b. $ 78,812

c. $ 27,390

d. $ 5,385

3. What was the cost (in millions) of the company’s inventory on February 2, 2014?

a. $ 1,929

b. $ 11,057

c. $ 531

d. $ 5,385

4. How much cash ( in millions) does The Home Depot have on February 2, 2014?

a. $ 1,929

b. $ 11,057

c. $ 531

d. $ 5,385

 
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Refer to the financial stateme

Refer to the of Apple Inc. for the year ended September 28, 2013, presented at investor.apple.com, to answer the following questions.

Instructions

(a) What was the amount of net cash provided by operating activities for the year ended September 28, 2013? For the year ended September 29, 2012?

(b) What was the amount of increase or decrease in cash and cash equivalents for the year ended September 28, 2013? For the year ended September 29, 2012?

(c) Which method of computing net cash provided by operating activities does Apple use?

(d) From your analysis of the 2013 statement of cash flows, did the change in accounts and notes receivable require or provide cash? Did the change in inventories require or provide cash? Did the change in and other current liabilities require or provide cash?

(e) What was the net outflow or inflow of cash from investing activities for the year ended September 28, 2013?

(f) What was the amount of income taxes paid in the year ended September 28, 2013?

 
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Refer to the financial stateme

Refer to the financial statement information of Under Armour reprinted at the back of the book.

Required

1. Using the format in Example 13-5, prepare common-size comparative income statements for 2011 and 2010. Use as the base ”Net revenues.” Round all percentages to the nearest one-tenth of a percent.

2. What changes do you detect in the income statement relationships from 2010 to 2011?

3. Using the format in Example 13-4, prepare common-size comparative balance sheets at the end of 2011 and 2010. Round all percentages to the nearest one-tenth of a percent.

4. What observations can you make about the relative composition of Under Armour’s assets from the common-size statements? What observations can be made about the changes in the relative composition of liabilities and stockholders’ equity accounts?

 
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Refer to the financial stateme

Refer to the of PepsiCo, presented at www.pepsico.com, and answer the following questions.
(a) What was the amount of net cash provided by operating activities for the year ended December 25, 2010? For the year ended December 26, 2009?
(b) What was the amount of increase or decrease in cash and cash equivalents for the year ended
December 25, 2010? For the year ended December 26, 2009?
(c) Which method of computing net cash provided by operating activities does PepsiCo use?
(d) From your analysis of the 2010 statement of cash flows, did the change in accounts and notes receivable require or provide cash? Did the change in inventories require or provide cash? Did the change in and other current liabilities require or provide cash?
(e) What was the net outflow or inflow of cash from investing activities for the year ended December 25, 2010?
(f) What was the amount of interest paid in the year ended December 25, 2010? What was the amount of income taxes paid in the year ended December 25, 2010?

 
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Refer to the financial stateme

Refer to the and related disclosure notes of PetSmart Inc. located in the company’s annual report for the fiscal year ending February 2, 2014 included with all new copies of this textbook. You also can locate the report online at www.PetSmart.com.

Notice that PetSmart’s net income has increased over the three years reported. To supplement their analysis of profitability, many analysts like to look at “free cash flow.” A popular way to measure this metric is “structural free cash flow” (or as Warren Buffett calls it “owner’s earnings”), which is calculated as net income from opera-tions plus depreciation and amortization minus capital expenditures.

Required:

Determine free cash flows for PetSmart in each of the three years reported. Compare that amount with net income each year. What pattern do you detect?

 
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Refer to the financial stateme

Refer to the and related disclosure notes of PetSmart Inc. in Appendix B located at the back of the text. www.petsmart.com.

Required:

1. What type of pension plan does PetSmart sponsor for its employees? Explain.

2. Who bears the “risk” of factors that might reduce retirement benefits in this type of plan? Explain.

3. Assuming that employee and employer contributions vest immediately, suppose a PetSmart employee con-tributes $1,000 to the pension plan during her first year of employment and directs investments to a municipal bond mutual fund. If she leaves PetSmart early in her second year, after the mutual fund’s value has increased by 2%, how much will she be entitled to roll over into an Individual Retirement Account (IRA)?

4. How did PetSmart account for its participation in the pension plan in fiscal 2013?

 
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Refer to the financial stateme

Refer to the and related disclosure notes of PetSmart, Inc., located in the company’s and related disclosure notes for the year ended February 2, 2014, in Appendix B located at the back of the text. You also can locate the report online at the PetSmart website, petsmart.com.

Required:

1. See the note on “Financing Arrangements and Lease Obligations” in the disclosure notes. What is PetSmart’s capital lease liability?

2. If the operating leases were capitalized, approximately how much would that increase the capital lease liability?

3. What effect would that have on the company’s debt to equity ratio? (Refer to the balance sheet.)

 
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Refer to the financial stateme

Refer to the and related disclosure notes of PetSmart in Appendix B located at the back of this textbook. Long-term refers to a company’s ability to pay its long-term obligations. Financing ratios provide investors and creditors with an indication of this element of risk.

Required:

1. Calculate the debt to equity ratio for PetSmart at February 2, 2014. The average ratio for companies in the pet supplies industry in a comparable time period was 1.8. What information does your calculation provide an investor?

2. Calculate PetSmart’s times interest earned ratio for the year ended February 2, 2014. The coverage for com-panies in the pet supplies industry in a comparable time period was 12. What does your calculation indicate about PetSmart’s risk?

 
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Refer to the financial stateme

Refer to the and related disclosure notes of PetSmart located in the company’s 2013 annual report included with all new copies of the text. They also can be found at www.petsmart.com. At February 2, 2014, fiscal year, PetSmart reported current liabilities of $794.3 million in its balance sheet.

Required:

1. What are the five components of current liabilities?

2. Are current assets sufficient to cover current liabilities? What is the current ratio for the year ended February 2, 2014? How does the ratio compare with the prior year?

3. Why might a company want to avoid having its current ratio be too low? Too high?

 
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Refer to the financial stateme

Refer to the of PepsiCo and the Notes to Consolidated in Appendix A to answer the following questions about , lease liabilities, and pension costs.
(a) Where does PepsiCo report its ?
(b) What is management’s opinion as to the ultimate effect of the “various claims and legal proceedings” pending against the company?
(c) Where did PepsiCo report the details of its lease obligations? What amount of rent expense from operating leases did PepsiCo incur in 2008? What was PepsiCo’s total future minimum annual rental commitment under non-cancelable operating leases as of December 27, 2008?
(d) What type of employee pension plan does PepsiCo have?
(e) What is the amount of postretirement benefit expense (other than pensions) for 2008?

 
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Refer to the financial stateme

Refer to the financial statement information of General Mills reprinted at the back of the book.
Required
1. Compute the following ratios and other amounts for each of the two years, ending May 31, 2009, and May 25, 2008. Because only two years of data are given on the balance sheets, to be consistent, you should use year-end balances for each year in lieu of average balances. Assume 360 days to a year. State any other necessary assumptions in making the calculations. Round all ratios to the nearest one-tenth of a percent.
a. Working capital
b. Current ratio
c. Acid-test ratio
d. Cash flow from operations to current liabilities
e. Debt-to-equity ratio
f. Cash flow from operations to capital expenditures
g. Asset turnover
h. Return on sales
i. Return on assets
j. Return on common stockholders’ equity
2. What is your overall analysis of the financial health of General Mills?

 
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Refer to the financial stateme

Refer to the financial statement information of Kellogg’s reprinted at the back of the book.

Required
1. Using the format in Example 13-5, prepare common-size comparative income statements for 2008 and 2007. Use as the base “Net sales.” Round all percentages to the nearest one-tenth of a percent.
2. What changes do you detect in the income statement relationships from 2007 to 2008?
3. Using the format in Example 13-4, prepare common-size comparative balance sheets at the end of 2008 and 2007. Round all percentages to the nearest one-tenth of a percent.
4. What observations can you make about the relative composition of Kellogg’s assets from the common-size statements? What observations can be made about the changes in the relative composition of liabilities and stockholders’ equity accounts?

 
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Refer to the financial stateme

Refer to the for Starbucks, the coffee vendor, in Exercise E9.9 in Chapter 9. Be sure to read the notes under the financial statements.

a. Prepare a reformulated income statement for fiscal year 2007 and reformulated balance sheets for 2007 and 2006 in a way that distinguishes operating and financing activities and identifies taxes applicable to various components of income.

b. For fiscal year 2007, calculate the following: return on common equity (ROCE), return on net operating assets (RNOA), and net borrowing cost (NBC). Use beginning-of-year amounts in denominators.

c. Calculate the financing leverage ratio (FLEV) at the beginning of the year and show that the following leverage equation for 2007 is satisfied:

ROCE = RNOA + [FLEV x (RNOA – NBC)]

d. Calculate the operating profit margin ratio (PM) and the (ATO). Also calculate the operating profit margin ratio from sales.

e. Calculate the operating liability leverage ratio at the beginning of 2007.

f. The firm’s borrowing cost on its short-term commercial paper is 5.5 percent or 3.6 percent after tax. Show how operating liability leverage levers up the return of net operating assets.

 
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Refer to the financial stateme

Refer to the of American Eagle Outfitters in Appendix B at the end of this book.

Required:

l. What types of securities are included in the short-term investments and the long-term investments reported on the company’s as of the end of fiscal 2014 (statement dated January 31, 2015)?

2. What is the balance of reported by the company at January 31, 2015? What does the change in from February 1, 2014, imply about corporate acquisition activities in the 2014 fiscal year? Do the notes to the indicate any acquisition or disposition activity in either fiscal 2013 or 2014? If so, what were the activities?

 
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Refer to the financial stateme

Refer to the financial statements and, for each of the last three years, identify Net Income and Cash Flow from Operating Activities. Investigate the Historical Cost of Non-Current Assets. Look on the Balance Sheet at the categories just below Current Assets. The following items will be assessed in particular:2.

 
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Refer to the financial stateme

Refer to the financial statements and related disclosure notes of Dell Inc. in Appendix B located at the back of the text.

Required:

1. What categories does the company use to classify its assets? Its liabilities?

2. Why are investments shown as a current asset?

3. Explain the current liability “deferred services revenue.”

4. What purpose do the disclosure notes serve?

5. What method does the company use to depreciate its property and equipment?

6. Does the company report any subsequent events or related party transactions in its disclosure notes?

 
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Refer to the financial stateme

Refer to the financial statements for Samsung in Appendix A. How much were its cash payments for treasury stock acquisitions and cash receipts from treasury stock disposals for the year ended December 31, 2015? How does the purchase of treasury stock affect the purchaser’s assets and total equity?

 
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Refer to the financial stateme

Refer to the financial statements of Apple in Appendix A to answer the following. 1. Compute times interest earned for the fiscal years ended 2015, 2014, and 2013. Apple reports that in 2015 interest expense was $733 million, in 2014 interest expense was $384 million, and in 2013 interest expense was $136 million. Comment on Apple’s ability to cover its interest expense for this period. Assume an industry average of 10 for times interest earned. 2. Identify Apple’s total accrued expenses. Fast Forward 3. Access Apple’s financial statements for fiscal years ending after September 26, 2015, at its website (Apple.com) or the SEC’s EDGAR database (SEC.gov). Compute its times interest earned for years ending after September 26, 2015, and compare your results to those in part 1.

 
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