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