Question

Suppose the following data were taken from the 2017 and 2016 financial statements of American Eagle Outfitters. (All numbers, including share data, are in thousands.)

		2017		2016
Current assets		$ 963,700		$931,250
Total assets		2,017,700		1,750,250
Current liabilities		419,000		372,500
Total liabilities		572,700		526,700
Net income		175,000		404,500
Net cash provided by operating activities		299,000		487,300
Capital expenditures		255,000		279,200
Dividends paid on common stock		88,000		120,200
Weighted-average shares outstanding		203,000		213,600

(a)

Calculate the current ratio for each year. (Round answers to 2 decimal places, e.g. 15.25.)

		2017			2016
Current ratio		enter current ratio rounded to 2 decimal places	: 1		enter current ratio rounded to 2 decimal places	: 1

(b)

Calculate earnings per share for each year. (Round answers to 2 decimal places, e.g. 15.25.)

		2017			2016
Earnings per share		$	enter a dollar amount rounded to 2 decimal places		$	enter a dollar amount rounded to 2 decimal places

(c)

Calculate the debt to assets ratio for each year. (Round answers to 1 decimal place, e.g. 29.5%.)

		2017			2016
Debt to assets ratio		enter percentages rounded to 1 decimal place	%		enter percentages rounded to 1 decimal place	%

(d)

Calculate the free cash flow for each year. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

		2017		2016
Free cash flow		$enter a dollar amount		$enter a dollar amount

Answer 1

a. Current ratio=current assets/current liabilities

Current ratio, 2017=963,700/419,000=2.30

Current ratio, 2016=931,250/372,500=2.50

b. Earnings per share=Net Income/Outstanding shares

Earnings per share, 2017=175,000/203,000=0.86

Earnings per share, 2016=404,500/213,600=1.89

c. Debt to assets ratio=Total liabilities/Total assets

Debt to assets ratio, 2017=572,700/2017700=28.38%

Debt to assets ratio, 2016=526700/1750250=30.09%

d. Free cashflow=Net cash provided by operating activities-Capital expenditures

Free cashflow, 2017=299,000-255,000=$44,000

Free cashflow, 2016=487,300-279,200=$208,100