Question

Comparing Abercrombie & Fitch and TX Companies Following are selected financial statement data from Abercrombie & Fach (ANF-upscale clothing retaler) and TDX Companies (T-value priced clothing retailer including T Maxx)-both dated the end of January 2009 or 2008. Tetal Assets Net Income Sales Auedu Abercrembe & FRch Abercrombie & Fech (a) Compute the return on assets for both companies for the year ended january 2009. Round your answers to one decimal place. VO 6002 xi %3* YON 6002 INY OL (b) Disaggregate the ROAS for both companies into the profit margin and asset turnover. Round profit margin answers to one decimal place. TpX2009 Profit Margin O uey ayad 6002 INY Round asset turnover answers to two decimal.places TIX 2009 Asset Turnover ANF 2009 Asset Turnover

Answer 1

a)
	Return on assets ( ROA) = Net income / average total assets
		TJX 2009	ANF 2009
	Net income	$ 881	$ 272
	Average total assets ( see note 1 )	$ 6,385	$ 2,708
	Return on assets (ROA)	13.80%	10%
	(net income / average total assets )*100	(881/6385)*100	(272/2708)*100
b)
	Profit margin = Net income / Sales
		TJX 2009	ANF 2009
	Net income	$ 881	$ 272
	Sales	$ 19,000	$ 3,540
	Profit margin	4.60%	7.70%
	( Net income / Sales )*100	(881/19000)*100	(272/3540)*100
	Assets Turnover = Sales / Average total assets
		TJX 2009	ANF 2009
	Sales	$ 19,000	$ 3,540
	Average total assets ( see note 1 )	$ 6,385	$ 2,708
	Assets Turnover	$ 2.98	$ 1.31
	(sales/ average total assets )
	Explanation :
	note 1 :
		TJX	ANF
	Total assets -2008	$ 6,600	$ 2,568
	Total assets -2009	$ 6,170	$ 2,848
	Average total assets	$ 6,385	$ 2,708
	( total Asset 2008+total Assets 2009)/2	(6600+6170)/2	(2,568+2848)/2