Refer to the financial statements of Urban Outfitters in Appendix C at the end of the book.

Required:

1. What is the company's revenue recognition policy? (Look in the notes to the financial statements,

2. Assuming that $50 million of cost of sales was due to no inventory purchase expenses (distribution and occupancy costs), how much inventory did the company buy during the year? (Use a T-account of inventory to infer how much was purchased.)

3. Calculate selling, general, and administrative expenses as a percent of sales for each year presented. By what percent did these expenses increase or decrease from fiscal years ended 2014 and 2015 and between 2013 and 2014? (Percentage Change = [Current Year Amount - Prior Year Amount] -f Prior Year Amount.)

4. Compute the company's net profit margin for each year presented and explain its meaning.