Gappo Group and Limito Brands maintain leading market positions in the specialty apparel retailing market. The products of Gappo (jeans, blouses, shirts) are more standardized than those of Limito. The products of Limito are more fashion-oriented and glitzy. Exhibit 7.24

presents comparative income statements for fiscal year 2013, and Exhibit 7.25

presents comparative balance sheets for Gappo and Limito at the ends of their 2012 and 2013 fiscal years. Cash flows from operations for fiscal year 2013 were $2,081 million for Gappo and $765 million for Limito. The income tax rate is 35%. On the basis of this information and appropriate financial statement ratios, which company is
a. More profitable in fiscal year 2013?
b. Less risky in terms of short-term liquidity in fiscal year 2013?
c. Less risky in terms of long-term liquidity in fiscal year2013?

  • CreatedMarch 04, 2014
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