We will continue to review the financial statements of A&F and H&M to learn additional information. The emphasis of this case is to review the income statement, balance sheet and computation of ratios.
Review the financial statements for the companies and answer the following questions for the last reporting year:
? What components of stockholders’ equity do each of the companies disclose?
? Do the companies have preferred stock shares outstanding? If so, what special features do these shares contain?
? Do any of the companies report treasury shares? If so, do the companies disclose the reason for reacquiring the shares?
? What are the basic and diluted earnings per share for each company?
? Have the companies reported any discontinued operations for the last year?
? Do the companies disclose any stock compensation plans? If so, are they reporting such plans under the fair value or intrinsic value methods? What was the value of compensation expense measured for any outstanding stock option plans?
Compute the following ratios. Also, interpret and assess each group of ratios for the company. What type of story are the ratios telling the analyst?
? Profitability ratios:
o Gross profit margin
o Net profit margin
o Return on stockholders’ equity
? Liquidity ratios:
o Current ratio
o Quick ratio
o inventory turnover
? Leverage ratios:
o Times-covered ratio
Do you find the balance sheet, income statement or other measures such as ratios the most informative? What type of information do you find in footnotes to the financial statements?
Modular Case Expectations
It is important to answer the questions as posed. The discussion should be three to five pages and written in a clear and concise manner. Support your discussion with references in APA format. You are encouraged to use Excel or other compatable spreadsheet when computations are involved.
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