Sections 1 and 2 Homework
1- Finding Financial Information
1. What types of products does it sell?
PacSun and outlet stores specialize in board sport inspired casual apparel, footwear and related
accessories catering to teenagers and young adults. They sell guys and girl’s apparel, accessories, and
2. Did the Chief Executive Officer and Executive Chairman of the Board believe that the company
had a good year? What do they cite as indicators of their company’s recent performance?
Yes. The factor in the comparable or “same store” sales, net merchandise margins, operating margins,
store sales trends, cash flow and liquidity (working capital)
3. On what date does PacSun’s most recent reporting year end?
January 29, 2005
4. For how many years does it present complete
a. Balance sheets?
b. Income statements?
c. Cash flow statements?
5. Are its financial statements audited by independent CPAs? How do you know?
Yes, because it has a report of independent registered public accounting firm
6. Did its total assets increase or decrease over the last year?
7. How much inventory (in dollars) did PacSun have as of January 29. 2005 (accountants would call
this the ending balance)?
1. What is the amount of net income for the most recent year?
2. What amount of revenue was earned in the most recent year?
3. How much inventory (in dollars) does the company have as of January 29, 2005?
4. By what amount did cash and cash equivalents change during the most recent year?
5. Who is the auditor of the company?
Ernst and Young
2- Finding Financial Information
1. The company shows on the balance sheet that inventories are worth $175,081,000. Does the
amount represent the expected selling price? Why or why not?
No, the merchandise inventories are stated at the lower of cost (FIFO) or market price. The pricing
depends on current rate of sale, the age of the item, or other factors.
2. List the types of current obligations this company has. You need not provide the amounts.
Accounts payable, accrued liabilities, current portion of capital lease obligations, current portion of long-
term debt, income taxes payable