Financial information for American Eagle is presented in Appendix A at the end of the book, and

Question:

Financial information for American Eagle is presented in Appendix A at the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book.

Required:

1. Determine which company maintains a higher ratio of current assets to total assets. How might this be an advantage for the company?

2. Determine which company maintains a higher ratio of current liabilities to total liabilities. How might this be a disadvantage for the company?

3. The dividend payout ratio equals dividends paid during the year divided by net income. Determine which company has a higher dividend payout ratio. Why might this be the case?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...