Financial information for American Eagle is presented in Appendix A at the end of the book. Required:
Question:
Financial information for American Eagle is presented in Appendix A at the end of the book.
Required:
1. Calculate the following risk ratios for the year ended February 3, 2018:
a. Receivables turnover ratio.
b. Average collection period.
c. Inventory turnover ratio.
d. Average days in inventory.
e. Current ratio.
f. Acid-test ratio.
g. Debt to equity ratio.
2. Calculate the following profitability ratios for the year ended February 3, 2018:
a. Gross profit ratio.
b. Return on assets.
c. Profit margin.
d. Asset turnover.
e. Return on equity.
Step by Step Answer:
a Receivables turnover ratio 2928000000 868000000 336 times Receivables turnover ratio This ratio measures how quickly a company is able to collect payment from its customers It is calculated by divid...View the full answer
Financial Accounting
ISBN: 978-1259914898
5th edition
Authors: David Spiceland, Wayne M. Thomas, Don Herrmann
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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