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CP3-3 Pacific Sunwear & American Eagle p.159

CP3-3 Pacific Sunwear & American Eagle p.159. Group 6 Steven Tuazon Erick Valencia Danielle Fuentes Kartik Patel. 1) What title does each company call its income statement? Explain what “Consolidated” means. American Eagle: Consolidated Statements of Income and Comprehensive Income

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CP3-3 Pacific Sunwear & American Eagle p.159

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  1. CP3-3Pacific Sunwear & American Eaglep.159 Group 6 Steven Tuazon Erick Valencia Danielle Fuentes Kartik Patel

  2. 1) What title does each company call its income statement? Explain what “Consolidated” means. • American Eagle: • Consolidated Statements of Income and Comprehensive Income • Pacific Sunwear: • Consolidated Statements of Comprehensive Income

  3. Consolidated means… • to combine (a number of financial accounts or funds) into a single overall account or set of accounts.

  4. 2) Which company had higher net income for the year ended Jan. 29, 2005? • Pacific Sunwear: $106,904,000 • American Eagle: $213,343,000 • American Eagle has higher income.

  5. 3) Compute the total asset turnover ratio for both companies for the year ended Jan. 29, 2005. • Pacific Sunwear: • 1,229,762 / [(677,668 + 644,487) / 2] • = 1.86 • ($ amount in thousands)

  6. 3) Compute the total asset turnover ratio for both companies for the year ended Jan. 29, 2005. • American Eagle: • 1,881,241 / [(1,293,659 + 932,414) / 2] • = 1.69 • ($ amount in thousands)

  7. 3) Which company is utilizing assets more effectively to generate sales? Why? • Pacific Sunwear’s higher asset turnover ratio signifies they are more efficient at managing assets to generate sales.

  8. 4) Compare the total asset turnover ratio for both companies to the industry average. • Pacific Sunwear’s TOR: • 1.86 • American Eagle’s TOR: • 1.69 • Industry Average TOR: • 2.03

  9. 4) On average, are these two companies utilizing assets to generate sales better or worse than their competitors? • On average, PacSun and American Eagle are not utilizing their assets as well as their competitors.

  10. 5) How much cash was provided by operating activities for the year ended Jan. 29, 2005 by each company? • Pacific Sunwear = $143,012,000 provided by operating activities at the end of Jan. 29,2005. • American Eagle = $368,683,000 provided by operating activities at the end of Jan. 29, 2005.

  11. 5) What was the percentage change in operating cash flows (1) from the year ended 1/31/04 to the year ended 1/29/05 and (2) from the year ended 2/1/03 to the year ended 1/31/04 for each company? • Pacific Sunwear: • -0.111749= -11.1749% • .799169= 79.9169% • American Eagle: • .713203= 71.3203% • .593421= 59.3421%

  12. The End

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