Question

1. go to www.sec.gov (Links to an external site.)Links to an external site. 2. Hover your cursor over "Filings" in the menu bar across the top 3. click on "company filings search" that pops up when you hover 4. in the FAST SEARCH box on the far right type in "AEO" for the ticker and click "search" for American Eagle. For Buckle type in "BKE". 5. in the "filings" column on the far left look for the most recent "10-K" filing and click on the "interactive data" link for the 10-K annual report in the "format" column 6. in the yellow box on the far left click on "financial statements" and the item will expand 7. select the Financial statement(s) that you need to review to find the answer to the questions.

A. Examine the Notes Tables section for Intangible Assets for American Eagle and answer the following:

1. What is American Eagles' intangible asset?

2. What is its recorded cost/book value net of accumulated amortization at February 3, 2018?

Patent; $67.3 million

Copyright; $68.9 million

Trademark; $46.6 million

Trademark; $49.3 million

B. Calculate the Current ratio for American Eagle & Buckle. Which company has the better current ratio?

American Eagle

Buckle

Ratios are the same

None of the above

C. Compare the current ratios of American Eagle & Buckle in #1 above to the current ratios of United Airlines and American Airlines on Page 392 of the text (4th Edition). Which industry maintains a higher current ratio?

Airlines

Retail

neither - about the same

D. Calculate the Quick ratio (Acid-test ratio) for American Eagle & Buckle. Which company has the better ratio and what does that mean?

Buckle has more liquid assets in relation to their current liabilities, and thus has a greater ability to pay off current liabilities.

American Eagle has more liquid assets in relation to their current liabilities, and thus has a greater ability to pay off current liabilities.

Ratios are equivalent - both companies are about the same

E. Does American Eagle or Buckle have more working capital?

American Eagle

Buckle

Neither

Answer 1

Solution:-

A.

1. What is American Eagles' intangible asset:-

	February 3,2018
Intengible assets net	46,666

2. What is its recorded cost/book value net of accumulated amortization at February 3, 2018:-

Trademark; $46.6 million

B. Calculate the Current ratio for American Eagle & Buckle.

	American Eagle	Buckle
Total current assets	968,530	360,584
Total current liability	485,221	97,906
Current ratio	2.00:1	3.68:1

Which company has the better current ratio:-

Buckle.