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Comparing Income Statements and Balance Sheets of Competitors Following are selected income statement and balance sheet data from two retailers: Abercrombie & Fitch (clothing retailer in the high-end market) and TJX Companies (clothing retailer in the value-priced market) (a) Express each income statement amount as a percentage of sales. Round your answers to one decimal place (ex: 0.2345-23.5%) Income Statement ANF $3,750 1,239 TJX $18,647 14,082 ($ millions) Sales Cost of goods sold 0% 0% Gross profit 2,511 4,565 0% Total expenses 2,035 0% 3,793 0% $476 $ ך72 Net income 096 0%(b) Express each balance sheet amount as a percentage of total assets. Round your answers to one decimal place (ex: 0.2345-23.5%) Balance Sheet ($ millions) ANF TJX Current assets $1,140 % $3,992 Long-term assets 1,427 0% 2,608 $2,567 $6,600 Total assets Current liabilities $ 543 % $2,761 Long-term liabilities 406 1,708 Total liabilities 949 4,469 Stockholders equity 1,618 2,131 $2,567 $6,600 Total liabilities and equityWhich of the following statements about business models is most consistent with the computations for part (a)? ANFs expenses as a percentage of sales are higher because it spends more on advertising than does TJX. CANF is a high-end retailer that is able to charge high prices for its products, but bears substantial operating costs to support its shopping experience. ANFs profit is higher than TJXs as a percentage of sales because its sales are higher than TJXs. CANFs gross profit is higher than TJXs because its sales volume allows it to manufacture clothes at a lower per unit cost than can TJX. Which of the following statements about business models is most consistent with the computations for part (b)? ANF reports lower current assets as a percentage of total assets because it pays its vendors on a more timely basis than does TJX. CANF reports higher long-term assets as a percentage of total assets because it depreciates its long-term assets more slowly than does TX. CANF reports lower current assets and higher long-term assets as a percentage of total assets because it carries less inventory and has a greater capital investment in its stores than does TJX. CANF reports lower current assets as a percentage of total assets because it is a smaller company and cannot afford the investment in inventory(c) Which company has a lower proportion of debt? What do the ratios tell us about relative riskiness of the two companies? CANF has a lower proportion of debt than does TJX, which implies that ANF is less risky than jX. Tpx has a lower proporion of debr than does AF whch impltes that Ty s les risky than ANF. ANF has a higher proportion of debt than does TJx, which implies that ANF is less risky than TJX. OTJX has a higher proportion of debt than does ANF, which implies that TJX is less risky than ANF.

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Comparing Income Statements and Balance Sheets of Competitors Following are selected income statement and balance sheet data from two retailers: Abercrombie Fitch (clothing retailer in the high-end market) and TJX Companies (clothing retailer in the value- priced market (a) Express each income statement amount as a percentage of sales. Round your answers to one decimal place (ex: 0.2345-23.5%) Income Statement (S millions) ANF TJX Sales $3,750 $18,647 1,239 33.0 % 14,082 75.5 % Cost of goods sold 2,511 67.0 4,565 24.5 Gross profit Total expenses 2,035 54.3 % 3,793 20.3 % 476 12.7 772 Net income(b) Express each balance sheet amount as a percentage of total assets. Round your answers to one decimal place (ex: 0.2345 23.5%) Balance Sheet ($ millions) ANF TJX Current assets $1,140 44.4 % $3.992 605 % Long -term assets 1,427 55.6% 2,608 39.5 % $2,567 $6,600 Total assets Current liabilit ies 543 21.2 % $2,761 41.8 % Long -term liabilities 406 15.8% 1,708 25.9 % Total liabilities 949 37.0% 4,469 67.7 % Stockholders equity ,618 63.0% 2,131 32.3 % $2,567 $6,600 Total liabilities and equityWhich of the following statements about business models is most consistent with the computations for part (a)? ANFs expenses as a percentage of sales are higher because it spends more on advertising than does TJX ANF is a high-end retailer that is able to charge high prices for its products, but bears substantial operating costs to support its shopping experience. r ANFs profit is higher than TJXs as a percentage of sales because its sales are higher than TJXs ANFs gross profit is higher than TJXs because its sales volume allows it to manufacture clothes at a lower per unit cost than can TJX. Which of the following statements about business models is most consistent with the computations for part (b)? r ANF reports lower current assets as a percentage of total assets because it pays its vendors on a more timely basis than does TJXX r ANF reports higher long-term assets as a percentage of total assets because it depreciates its long- term assets more slowly than does TJX ANF reports lower current assets and higher long-term assets as a percentage of total assets because it carries less inventory and has a greater capital investment in its stores than does TJX r ANF reports lower current assets as a percentage of total assets because it is a smaller company and cannot afford the investment in inventory (c) Which company has a lower proportion of debt? What do the ratios tell us about relative riskiness of the two companies? 0 ANF has a lower proportion of debt than does TJX, which implies that ANF is less risky than TJX 0 TJX has a lower proportion of debt than does ANF, which implies that TJX is less risky than ANF 0 ANF has a higher proportion of debt than does TJX, which implies that ANF is less risky than TJX TJX has a higher proportion of debt than does ANF, which implies that TJX is less risky than ANF

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