Business Application Case Analyzing earnings information at two
real-world companies
The following data are based on information in the 2008 annual reports of Aeropostale, Inc., and American Eagle Outfitters, Inc. Dollar amounts are in thousands.
Aeropostale, Inc. is a retailer of casual apparel and accessories, targeting 14- to 17-year-old young women and young men. As of January 31, 2009, it operated 914 stores in 48 states and Puerto Rico, and 29 in Canada.
American Eagle Outfitters, Inc., is a retailer of clothing, accessories targeting 15- to 25-year- old customers. As of January 31. 2009, it operated 954 American Eagle Outfitters stores in the United States and Canada.
| Aeropostale | American Eagle Outfitters |
Assets | $ 657,919 | $1,963,676 |
Liabilities | 302,859 | 554,645 |
Stockholders’ equity | 355,060 | 1,409,031 |
Revenues | 1,885,531 | 2,988,866 |
Expenses | 1,736,109 | 2,809,805 |
Dividends |
| 82,394 |
Retained earnings at end of 2007 | 543,911 | 1,601,784 |
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Required
a. Calculate each Company’s net income and retained earnings for 2008. ,
b. For each Company, calculate its net earnings as a percentage of its revenues. Show your , computations.
c. Which Company performed better in 2008? Explain your answer.
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