Financial information for Buckle is presented in Appendix B at the end of the book. Required: 1-a. Calculate the current ratio for the past two years. (Round your answers to 2 decimal places.) 2018 2017 Current Ratio 1-b. Did the current ratio improve or weaken in the more recent year? O Improve O Weaken 2-a. Calculate the acid-test (quick) ratio for the past two years. (Round your answers to 2 decimal places.) 2018 2017 Acid-Test Ratio 2-b. Did the acid-test ratio improve or weaken in the more recent year? Improve Wealan 2-b. Did the acid-test ratio improve or weaken in the more recent year? O Improve O Weaken 3. If Buckle purchased $50 million of inventory by debiting Inventory and crediting Accounts Payable, how would its current ratio and acid-test ratio change? (Round your answers to 2 decimal places.) Before After Current Ratio Acid-Test Ratio February 3, 2018 January 28, 2017 ASSETS 196,536 CURRENT ASSETS: Cash and cash equivalents Short-term investments (Notes B and C) Receivables Inventory Prepaid expenses and other assets (Note F) Total current assets 165,086 $ 50,833 8,588 118,007 18,070 360,584 49,994 8,210 125,694 6,023 386,457 PROPERTY AND EQUIPMENT (Note D) Less accumulated depreciation and amortization 459,043 (309,497) 149 546 459,359 (290,364) 168,995 LONG-TERM INVESTMENTS (Notes B and C) OTHER ASSETS (Notes F and G) 21,453 6,533 18,092 6,303 Total assets 538,116 579.847 LIABILITIES AND STOCKHOLDERS' EQUITY s CURRENT LIABILITIES: Accounts payable Accrued employee compensation Accrued store operating expenses Gift certificates redeemable Income taxes payable Total current liabilities 29,387 22.307 15.646 18,202 12,364 25.079 26,906 14,695 21,199 10,737 98.616 97,906 DEFERRED COMPENSATION (Note I) DEFERRED RENT LIABILITY Total liabilities 15.154 33,808 146,868 13,092 37,600 149,308 COMMITMENTS (Notes E and H) 488 486 STOCKHOLDERS' EQUITY (Note J): Common stock, authorized 100,000,000 shares of $.01 par value, 48,816,170 and 48,622,780 shares issued and outstanding at February 3, 2018 and January 28, 2017, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total stockholders' equity 144.279 246,570 (89) 391,248 139,398 290,737 (82) 430,539 Total liabilities and stockholders' equity 538,116 $ 579,847 See notes to consolidated financial statements. THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands Except Per Share Amounts) February 3, 2018 Fiscal Years Ended January 28, 2017 January 30, 2016 SALES, Net of returns and allowances of $87,389, 5101,375, and $113,325, respectively 913,380 $ 974,873 $ 1,119,616 COST OF SALES (Including buying, distribution, and occupancy costs) 533,357 577,705 638,215 Gross profit 380,023 397,168 481,401 OPERATING EXPENSES: Selling General and administrative 206,068 39.877 245,945 205,933 38,475 244,408 212,531 39,282 251,813 INCOME FROM OPERATIONS 134,078 152,760 229,588 OTHER INCOME, Net 5,407 3,511 5.236 INCOME BEFORE INCOME TAXES 139,485 156,271 234,824 PROVISION FOR INCOME TAXES (Note F) 49,778 58 310 87.541 NET INCOME 89,707 S 97,961 $ 147.283 EARNINGS PER SHARE (Note K): Basic 1.86 S 2.04 $ 3.06 Diluted 1.85 S 2.03 $ 3.06 See notes to consolidated financial statements. B-6 APPENDIX B The Buckle, Inc., 2017 Annual Report THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in Thousands) February 3, 2018 Fiscal Years Ended January 28, 2017 January 30, 2016 NET INCOME 89,707 97,961 147,283 221 98 OTHER COMPREHENSIVE INCOME, NET OF TAX: Change in unrealized loss on investments, net of tax of $17, s129, and S59, respectively Reclassification adjustment for losses included in net income, net of tax of $0, $17, and So, respectively Other comprehensive income 28 249 98 COMPREHENSIVE INCOME 89,700 $ 98,210 147,381 See notes to consolidated financial statements. THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in Thousands Except Share and Per Share Amounts) Number of Shares Accumulated Other Comprehensive Loss Additional Paid-in Capital Common Stock Retained Earnings Total BALANCE, January 31, 2015 48,379,613 $ 484 S 131,112 s 224,111 $ (429) s 355,278 147.283 (93,768) 147,283 (93,768) 152,190 Net income Dividends paid on common stock, ($1.94 per share) Issuance of non-vested stock, net of forfeitures Amortization of non-vested stock grants, net of forfeitures Income tax benefit related to vesting of restricted shares Common stock purchased and retired Change in unrealized loss on investments, net of tax (1) 6,197 6,197 774 774 (3.218) (103.693) (1) (3.219) 98 98 BALANCE, January 30, 2016 48,428,110 484 S 134,864 $ 277,626 $ (331) $ 412,643 97,961 (84,850) 97,961 (84,850) 194,670 2 Net income Dividends paid on common stock, ($1.75 per share) Issuance of non-vested stock, net of forfeitures Amortization of non-vested stock grants, net of forfeitures Income tax benefit related to vesting of restricted shares Change in unrealized loss on investments, net of tax Reclassification adjustment for losses included in net income, net of tax (2) 5.330 5,330 (794) (794) 221 221 28 28 BALANCE, January 28, 2017 48,622,780 S 486 S 139,398 S 290,7375 (82) $ 430,539 89,707 (133,874) 89,707 (133,874 Net income Dividends paid on common stock, ($2.75 per share) Issuance of non-vested stock, net of forfeitures Amortization of non-vested stock grants, net of forfeitures Change in unrealized loss on investments, net of tax 193,390 2 (2) 4.883 4,883 (7) 48,816,170 488 144.279 246,570 (89) 391.248 BALANCE, February 3, 2018 See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) February 3, 2018 Fiscal Years Ended January 28, 2017 January 30, 2016 89,707 $ 97,961 $ 147,283 30,745 4,883 32,787 5,330 (3,260) 1,875 32,142 6,197 (1,217) 448 (340) 1,628 CASH FLOWS FROM OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization Amortization of non-vested stock grants, net of forfeitures Deferred income taxes Other Changes in operating assets and liabilities: Receivables Inventory Prepaid expenses and other assets Accounts payable Accrued employee compensation Accrued store operating expenses Gift certificates redeemable Income taxes payable Deferred rent liabilities and deferred compensation (413) 7,687 (12,047) 4,584 (4,599) 951 (2.997) 1,662 (1,730) 3,853 23,872 7 (8,314) 6.220) 8,056 (1,659) (3,610) (1,812) (389) (19,645) 9,722 (182) (3,794) (3,345) (1,134) (4,441) (2,323) Net cash flows from operating activities 119,721 148,866 159,322 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment Proceeds from sale of property and equipment Change in other assets Purchases of investments Proceeds from sales/maturities of investments (13,462) 263 92 (56,631) 52,441 (31,663) 318 80 (41,621) 44,221 (34,578) 199 100 (29,714) 29,135 Net cash flows from investing activities (17,297) (28,665) (34,858) CASH FLOWS FROM FINANCING ACTIVITIES: Purchases of common stock Payment of dividends (3.219) (93,768) (133,874) (84,850) Net cash flows from financing activities (133,874) (84,850) (96,987) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (31,450) 35,351 27,477 CASH AND CASH EQUIVALENTS, Beginning of year 196,536 161,185 133,708 CASH AND CASH EQUIVALENTS, End of year 165,086 196,536 $ 161,185