AbercrombieFitch Financial Analysis - 1299 Words

ACCOUNTING 6000 FINANCIAL PAPER ANALYSIS Introduction: The structure of the paper will be as follows: First, the purpose and objectives of the fnancial analysis will be streched out, and the target audience will be identified. Second, an initial review of the company that will be taken into consideration, ABERCROMBIE FITCH will be conducted. Third, horizontal and vertical analyses with the help of the three major financial statements of the AbercrombieFitch Annual Report (Income Statement, Balance Sheet, and Statement of Cash Flows) will be conducted. Unusual trends will be identified. Additionally, ratios for the financial statemenst will be classified into four broad groupings, based on the characteristics that particular†¦show more content†¦Helps to indicate how AbercrombieFitch is performing with regard to the market value of its shares. • Earnings p. Share = Net Income / Weighed Average Number of Shares Outstanding = $ 333986 / ((87161+91221)/2) = 3.745 • Price to Earnings (P/E) = Market Price per Share / Earnings per Share = 70.58 $ / 3.745 = 18.85 Results and Interpretation of the Calculations: The current ratio of 1.93, meaning that there are almost twice as many assets as there are liabilities, indicates AbercrombieFitch s ability to meet short-term debt obligations. This ratio is relatively high, meaning that the company is very liquid and considered as having good short-term financial strength. A quick ratio of 1.19 is also indicating strong short-term liquidity, meaning that the company can repay current liabilities without relying on the sale of inventory. Number of days sales in inventory of only 57 days means, that inventory changes frequently, especially since AbercrombieFitch is a clothing company. This high turnover rate can generally be viewed at positively. The gross profit margin tells us as potential investors the percentage of revenue /Show MoreRelatedFinancial Analysis : Abercrombie Fitch1698 Words   |  7 PagesDespite Abercrombie Fitch’s efforts to win back loyal consumers with their new rebranding initiative, the company continues to experience a decline in annual revenue and dismal growth coupled with a poor return on investment, making it a risky investment option for potential shareholders. 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