Profitability Analysis with Financial Ratio
Not what you're looking for?
Profitability analysis for two types of retailers. Information taken from recent annual reports of two retailers appears as follows (amounts in millions). One of these companies is Family Dollar Stores, a discount store chain, and the other is Abercrombie & Fitch, a specialty retailer of apparel. The income tax rate is 35%. Indicate which of these companies Family Dollar Stores is and which is Abercrombie & Fitch. Explain your reasoning using appropriate financial ratios.
Company A Company B
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,750 $6,834
Interest Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 17
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476 243
Average Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,458 2,574
Purchase this Solution
Solution Summary
Using financial ratio such as Profit Margin and Asset Turnover Ratio to determine company nature.
Solution Preview
Company A is Abercrombie & Fitch, a specialty retailer of apparel as it has higher profit margin and lower total assets turnover than Company B, the Family Dollar Stores, a discount store chain.
Company A: Rate of return on Assets = [476 + ...
Purchase this Solution
Free BrainMass Quizzes
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Basics of corporate finance
These questions will test you on your knowledge of finance.