Compute the current ratios for A Incorporation and G Incorporation.

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Answer 1

Question

Chapter 4, Problem 2BTN

1.

To determine

Compute the current ratios for A Incorporation and G Incorporation.

2.

To determine

Determine which company has the ability to pay short-term obligations in the current year.

3.

To determine

Analyze and comment on each company’s current ratios for the past two years.

4.

To determine

Determine both the Incorporation current ratios are underperform or outperform (assume industry average ratio is 2.0).

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Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's expenses, Gross margin, and Net income?

Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?

Answer 2

Question

Chapter 4, Problem 2BTN

1.

To determine

Compute the current ratios for A Incorporation and G Incorporation.

2.

To determine

Determine which company has the ability to pay short-term obligations in the current year.

3.

To determine

Analyze and comment on each company’s current ratios for the past two years.

4.

To determine

Determine both the Incorporation current ratios are underperform or outperform (assume industry average ratio is 2.0).

Expert Solution & Answer

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Answer 3

Question

Chapter 4, Problem 2BTN

1.

To determine

Compute the current ratios for A Incorporation and G Incorporation.

2.

To determine

Determine which company has the ability to pay short-term obligations in the current year.

3.

To determine

Analyze and comment on each company’s current ratios for the past two years.

4.

To determine

Determine both the Incorporation current ratios are underperform or outperform (assume industry average ratio is 2.0).

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 4

Question

Chapter 4, Problem 2BTN

1.

To determine

Compute the current ratios for A Incorporation and G Incorporation.

2.

To determine

Determine which company has the ability to pay short-term obligations in the current year.

3.

To determine

Analyze and comment on each company’s current ratios for the past two years.

4.

To determine

Determine both the Incorporation current ratios are underperform or outperform (assume industry average ratio is 2.0).

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 5

Chapter 4, Problem 2BTN

1.

To determine

Compute the current ratios for A Incorporation and G Incorporation.

2.

To determine

Determine which company has the ability to pay short-term obligations in the current year.

3.

To determine

Analyze and comment on each company’s current ratios for the past two years.

4.

To determine

Determine both the Incorporation current ratios are underperform or outperform (assume industry average ratio is 2.0).

Answer 6

Chapter 4, Problem 2BTN

1.

To determine

Compute the current ratios for A Incorporation and G Incorporation.

Answer 7

Chapter 4, Problem 2BTN

1.

To determine

Compute the current ratios for A Incorporation and G Incorporation.

Answer 8

2.

To determine

Determine which company has the ability to pay short-term obligations in the current year.

Answer 9

2.

To determine

Determine which company has the ability to pay short-term obligations in the current year.

Answer 10

3.

To determine

Analyze and comment on each company’s current ratios for the past two years.

Answer 11

3.

To determine

Analyze and comment on each company’s current ratios for the past two years.

Answer 12

4.

To determine

Determine both the Incorporation current ratios are underperform or outperform (assume industry average ratio is 2.0).

Answer 13

4.

To determine

Determine both the Incorporation current ratios are underperform or outperform (assume industry average ratio is 2.0).

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 4 - G. Venda, owner of Venda Services, withdrew 25,000...Ch. 4 - The following information is available for the R....Ch. 4 - Which of the following errors would cause the...Ch. 4 - The temporary account used only in the closing...Ch. 4 - Prob. 5MCQ Ch. 4 - Prob. 1DQ Ch. 4 - What accounts are affected by closing entries?...Ch. 4 - What two purposes are accomplished by recording...Ch. 4 - Prob. 4DQ Ch. 4 - Prob. 5DQ

Compute the current ratios for A Incorporation and G Incorporation.

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Compute the current ratios for A Incorporation and G Incorporation.

Determine which company has the ability to pay short-term obligations in the current year.

Analyze and comment on each company’s current ratios for the past two years.

Determine both the Incorporation current ratios are underperform or outperform (assume industry average ratio is 2.0).

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Chapter 4 Solutions