Comparing Companies within an Industry
Refer to the financial statements of American Eagle given in Appendix B. Urban Outfitters given in Appendix C, and the Industry Ratio Report given in Appendix D at the end of this book. Most companies report some amounts of bonds payable on their balance sheets. It is somewhat surprising, therefore, that neither company reports any bond liabilities.
Required:
1.Examine the statements of cash flow for both companies. What is the primary source for cash flow for both companies?
2.Two financial ratios (the debt-to-equity ratio and times interest earned) are discussed in this chapter. Are they relevant for these companies? Explain.
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