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Individual 1.pdf - Abercrombie & Fitch Financial Ratio...

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Abercrombie & FitchFinancial RatioAnalysisShuyan (Fiona) LiACT 414 Individual Project 1
Financial Performance SummarySales+ cost of goods sold/unit= decreasing gross marginStores and distribution expense and restructuring charges kept decreasing, sales continuously held back.Net income only half attributable to A&FIncome statementWeights mostly at similar level whereas actual dollar balances changing intenselyIncrease in debt VS decrease in equity, with assets decreasing in generalContinuous repurchase of treasury stock → suspicious of EPS manipulationBalance SheetOperating inflow improved in 2014 and 2015 then decreased. It was driven by change in inventory and reduced accounts payable but not increase in sales.Investing outflow remained relatively stable around (4%).More financing outflows were seen from 2014 to 2016Statement of Cash FlowLow Profitability, high solvency, and low coverage all show that A&F did not operate so well in the past four years, it is more likely to suffer financial distress.Liquidity andAltman’s z score, meanwhile, indicated that A&Fhas been pretty liquid andhealthy, which would bring littlerisk of bankruptcy in the shortterm.Financial Ratio
Jan 2016Jan 2015Feb 2014Feb 2013Jan 2016Jan 2015Feb 2014Feb 2013$588,578$520,708$600,116$643,50524.19%20.79%21.05%21.54%$56,868$52,910$67,965$99,6222.34%2.11%2.38%3.33%$436,701$460,794$530,192$426,96217.95%18.39%18.60%14.29%-$13,986$21,835$32,558-0.56%0.77%1.09%$96,833$116,574$100,458$105,1773.98%4.65%3.52%3.52%$1,178,980$1,164,972$1,320,566$1,307,82448.46%46.50%46.32%43.78%$894,178$967,001$1,131,341$1,308,23236.75%38.60%39.68%43.79%$359,881$373,194$399,090$371,34514.79%14.90%14.00%12.43%$2,433,039$2,505,167$2,850,997$2,987,401100.00%100.00%100.00%100.00%AssetsCurrent assets:Cash and equivalentsReceivablesInventories, netDeferred income taxes, netOther current assetsTotal current assetsProperty and equipment, netOther assetsTotal assetsLiabilities and stockholders'BalanceSheetAssetsAsset balances have been quite steady in the past four years. 2015 seemed like a prosperous year than other years. At the beginning of 2016, current assets increased by almost 5%, largely due to the increase in cash and equivalents, and inventories. Cash decreased by 0.49% and 0.26% in 2014 and 2015 respectively, but it soon rised up significantly by 3.4% in 2016.Receivables decreased greatly from 2013 to 2016 by $42,754 million (1.22%), nearly a half of 2013 receivables. Chances are that receiving collections from consumers became difficult.Starting from 2014, the percentage of inventory has seen a significant rise by 3.31% and has remained around 18%-18.5%. This implies a major change in estimate. Based on notes, A&F writes down the lower of cost or market reserve for inventory at $12.7M million (2014) and $22.1 million (2015), and shrink reserve at $11.4 million (2015) and $13.6 million (2014) respectively, showing that A&F is becoming more accurate in anticipating its inventory value. PP&E accounts for a large weight in assets, but it has been decreasing over the past four years by a total of 7.04%.
Jan 2016Jan 2015Feb 2014Feb 2013Jan 2016Jan 2015Feb 2014Feb 2013Liabilities and stockholders' equityCurent liabilities:Accounts payable$184,175$141,685$130,715$140,3967.57%5.66%4.58%4.70%Accrued expenses$321,237$282,736$322,834$398,86813.20%11.29%11.32%13.35%Short-term portion of deferred lease credits$23,303$26,629$36,165$39,0540.96%1.06%1.27%1.31%Income taxes payable$5,988$32,804$63,508$112,4830.25%1.31%2.23%3.77%Short-term portion of borrowings, net-$2,102$15,000--0.08%0.53%-

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