Question:
The following information is available for Claire’s Stores from January 2013 through January 2017. In the last column, the median industry values are reported for apparel and accessory stores. Assets and revenues are in millions of dollars, balance sheet percentages are a percentage of total assets, income statement percentages are a percentage of total revenues, and the statements of cash flow percentages are a percentage of total assets.
Required:
1. Evaluate the performance of Claire’s Stores over time. Is there a year, where you first become concerned about the likelihood of bankruptcy?
2. Because Claire’s is a private company, the market value of equity is unknown. Compute the Z- score for private firms. Make an assessment of the likelihood of bankruptcy during 2018.
Transcribed Image Text:
Claire's Stores Inc.
(dollars in thousands)
Balance Sheet
Assets
Total Liabilities
Stockholders' equity
Selected Balance Sheet
Current Assets
Current Liabilities
Accounts Receivables
Inventory
Long-term debt
Retained earnings
Income Statement
Total Revenues
Cost of goods sold
Gross margin
Operating income
Net income
January 2013
2,799,272
2,561,976
237,296
373,827
251,736
157,549
2,373,366
(636,116)
1,557,020
755,996
801,024
236,168
1,282
January 2014
2,694,026
2,563,507
130,519
283,001
251,158
178,882
2,378,786
(701,423)
1,513,177
753,631
759,546
171,772
(65,307)
January 2015 January 2016
2,426,328
2,525,201
(98,873)
220,146
232,901
2,213,555
2,520,233
1,494,251
767,459
726,792
11,460
(211,978)
(306,678)
212,755
273,566
145,908
151,954
2,346,229
2,351,072
(913,401) (1,149,836)
1,402,860
734,067
668,793
(14,561)
(236,435)
January 2017
2,000,206
2,282,897
(282,691)
225,943
234,631
130,239
2,137,058
(1,095,937)
1,311,316
682,828
628,488
(63,718)
53,899
Median Industry
2016
848,744
48%
52%
54%
26%
28%
18%
27%
1,442,718
62%
38%
5%
3%