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. Which company carries a greater inventory balance as a percentage of total assets?
2. Analyze each company’s inventory using the and average days in inventory.
3. Determine which company’s operations are more profitable using the gross profit ratio.
4. Considering the companies’ ratio of operating expenses to net sales, does your answer to Requirement 3 change? Explain.

Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,...