Using the financial ratios provided in Table 4.1 and following the financial statement information presented for Urban Outfitters, Inc.
, calculate the following ratios for Urban Outfitters for both 2016 and 2017
: a. Gross profit margin
b. Operating profit margin
c. Net profit margin
d. Times-interest-earned (or coverage) ratio
e. Return on stockholders’ equity
f. Return on assets
g. Debt-to-equity ratio
h. Days of inventory
i. Inventory turnover ratio
j. Average collection period Based on these ratios, did Urban Outfitter’s financial performance improve, weaken, or remain about the same from 2016 to 2017?
Consolidated Income Statements for Urban Outfitters, Inc.,
2016–2017 (in thousands, except per share data)
2016 2017
Net sales (total revenue) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,545,794 $3,445,134
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,301,181 2,243,232
Selling, general, and administrative . . . . . . . . . . . . . . . . . . . . . . . . 906,086 848,323
(continued)
118 PART 1 Concepts and Techniques for Crafting and Executing Strategy
2016 2017
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338,527 353,579
Other income (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,587) (5,449)
Interest income and other, net . . . . . . . . . . . . . . . . . . . . . . . . . . 4159 1901
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338,099 350,031
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119,979 125,542
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $218,120 $224,489
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.87 $ 1.79
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.86 $ 1.78
Source: Urban Outfitters, Inc., 2017.
Consolidated Balance Sheets for Urban Outfitters, Inc., 2016–2017
(in thousands, except per share data)
January 31,
2017
January 31,
2016
Assets
Current Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 248,140 $ 248,140
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,067 61,061
Receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,505 75,723
Merchandise inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338,590 330,223
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . 129,095 102,078
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 881,397 834,361
Net property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 867,786 863,137
Deferred income taxes and Other assets . . . . . . . . . . . . . . . . . . . 153,454 135,803
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,902,637 $1,833,301
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 119,537 $ 118,035
Accrued salaries and benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,782 41,474
Accrued expenses and Other current liabilities . . . . . . . . . . . . . . 174,609 169,722
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352,928 329,231
(continued)
chapter 4 Evaluating a Company’s Resources, Capabilities, and Competitiveness 119
January 31,
2017
January 31,
2016
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 150,000
Deferred rent and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 236,625 216,843
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589,553 696,074
Commitments and Contingencies
Equity
Preferred stock $0.001 par value; 10,000,000 shares
authorized; no shares issued and outstanding
0 0
Common stock $0.001 par value; 200,000,000 shares
authorized; 116,233,781 and 117,321,120 shares issued
and outstanding
12 12
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0 $ 0
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,347,141 1,160,666
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,313,084 1,137,227
Total Liabilities and Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,902,637 $1,833,301