Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
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Chapter 5, Problem 3C
1.
To determine
Ascertain the company that is more profitable by calculating the ratios given and comment on the relative profitability of the two companies.
2.
To determine
State the implication of these ratios in achieving an adequate return on assets in the clothing retail industry.
3.
To determine
Explain the manner in which the use of debt financing in the clothing retail industry and the use of debt by these two companies can be characterized.
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In 2014, Company A reported profits of about $41 billion on sales of $332 billion. For that same period, Company B
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Fill in the table below. (Round the NMC to the nearest whole number and all other values to two decimal places.)…
In 2013, Company A reported profits of about $11 billion on sales of $19 billion. For that same period, Company B posted a profit of about $525 million on sales of $2.0
billion. So Company A is a better marketer, right? Sales and profits provide information to compare the profitability of these two competitors, but between these numbers is
information regarding the efficiency of marketing efforts in creating those sales and profits. Using the following information from the companies' incomes statements (all
numbers are in thousands), calculate profit margin, net marketing contribution, marketing return on sales (or marketing ROS), and marketing return on investment (or
marketing ROI) for both companies. Which company is performing better?
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$18,714,700
$10,443,300
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Fill in the table below. (Round the NMC to the nearest whole number and all other values to one decimal place.)
Company A Company B
Sales
Gross Profit…
K
In early 2022, the following information,, was true about
Abercrombie and Fitch (ANF) and The Gap (GPS), both clothing retailers.
Values (except price per share) are in millions of dollars.
a. What is the market-to-book ratio of each company?
b. What conclusion do you draw from comparing the two ratios?
Data table
(Click on the following icon in order to copy its contents into a spreadsheet.)
ANF
GPS
Book Equity
$825
$2,724
Price per Share
$39.04
$18.04
Number of Shares
47.99 million
366.79 million
-
Chapter 5 Solutions
Principles of Accounting
Ch. 5 - Prob. 1DQCh. 5 - Prob. 2DQCh. 5 - Prob. 3DQCh. 5 - Prob. 4DQCh. 5 - Prob. 5DQCh. 5 - Prob. 6DQCh. 5 - Prob. 7DQCh. 5 - Prob. 1SECh. 5 - Prob. 2SECh. 5 - Tell whether each of the following accounts is a...
Ch. 5 - Prob. 4SECh. 5 - Prob. 5SECh. 5 - Prob. 6SECh. 5 - Prob. 7SECh. 5 - The lettered items that follow represent a...Ch. 5 - Each of the statements that follow violates one or...Ch. 5 - The lettered items that follow represent a...Ch. 5 - Prob. 4EACh. 5 - Prob. 5EACh. 5 - Prob. 6EACh. 5 - Prob. 7EACh. 5 - Prob. 8EACh. 5 - Prob. 1PCh. 5 - The information that follows is from Jasons...Ch. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5APCh. 5 - The information that follows is from Matts...Ch. 5 - Prob. 7APCh. 5 - The information that follows is from Rodriguezs...Ch. 5 - Prob. 1CCh. 5 - Prob. 2CCh. 5 - Prob. 3CCh. 5 - Prob. 4CCh. 5 - Prob. 5C
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