The recent 10-K SEC filings of American Eagle (Appendix B) and Urban Outfitters (Appendix C) are included in the back of your textbook. Your text also includes an Industry Ratio Report (Retail-Family Clothing Stores) in Appendix D. Please carefully review these three Appendices and then complete both requirements A & B.
- Compute the ratios listed below for both companies for the most recent year reported. In order to earn credit for your answers you must attach your work. No credit will be awarded if legible and logical calculations are not attached. Please show these calculations on separate pages (one for American Eagle and one for Urban Outfitters).
Ratios
American Eagle
Urban Outfitters
Industry Average
Return on equity
Earnings per share
Profit margin
Current ratio
Inventory turnover
Debt/Equity
Price earnings
Dividend yield
B. How does American Eagle compare to Urban Outfitters and the retail industry as a whole regarding each of the areas below. Provide your assessment for each area and support your conclusions by reference to both the ratios you computed and the industry averages provided.
· Profitability
· Liquidity
· Solvency
· Market Tests
C. If you had $100,000 to invest in a retail clothier, which of these two would you prefer to invest in? Explain why you think this way, making reference to answers to Parts A and B.