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The financial statements of Columbia Sportswear Company are presented in Appendix B. Click here to view...

The financial statements of Columbia Sportswear Company are presented in Appendix B.

Click here to view Appendix B.

The financial statements of VF Corporation are presented in Appendix C.

Click here to view Appendix C.

Answer the following questions for each company.

(a)

Based on the information in these financial statements, compute the 2016 return on common stockholders’ equity, debt to assets ratio, and return on assets for each company. (Round answers to 1 decimal places, e.g. 15.2%.)

Columbia Sportswear Company VF Corporation

Return on common stockholders’ equity

 enter the return on common stockholders’ equity ratio in percentages % enter the return on common stockholders’ equity ratio in percentages %

Debt to assets

 enter the debt to assets ratio in percentages % enter the debt to assets ratio in percentages %

Return on assets

 enter the return on assets ratio in percentages % enter the return on assets ratio in percentages %


(c)

Compute the payout ratio for each company. (Round answers to 1 decimal places, e.g. 15.2%.)

Columbia Sportswear Company VF Corporation

Payout ratio

 enter the payout ratio in percentages % enter the payout ratio in percentages %


Which pays out a higher percentage of its earnings?

select a company which pays out a higher percentage of its earnings                                                          Columbia Sportswear CompanyVF Corporation pays out a higher percentage of its earnings.

Solutions

Expert Solution

a.) For V.F. Corporation

Return on common stockholders’ equity = Net Income / Average Total stockholders’ equity = $1,074,106 / ($ 4,940,921 + $5,384,838) / 2= 20.80%

Debt to assets = Total Liabilities / Total Assets = $ 4,798,366 / $ 9,739,287= 49.27%

Return on assets = Net Income / Average Total Assets = $1,074,106 / ( $ 9,739,287 + $ 9,639,542) /2 = 11.09%

For Columbia Sportswear Company

Return on common stockholders’ equity = Net Income / Average Total stockholders’ equity = $191,898 / ($ 1,581,511 + 1,415,813) / 2 = 12.80%

Debt to assets = Total Liabilities / Total Assets = $ 432,383 / $ 2,013,894= 21.47%

Return on assets = Net Income / Average Total Assets = $191,898 /( $ 2,013,894 + $1,846,153) / 2= 9.94%

c) For V.F. Corporation

Payout = Cash Dividends Paid / Net Income = $ 635,994 / $ 1,074,106 = 59.21%

For Columbia Sportswear Company

Payout = Cash Dividends Paid / Net Income = $ 48,122 / $ 191,898 = 25.08%

V.F. Corporation pays out a higher portion of it's earnings.

Note:- All figures are in $ Thousands.

Cash Dividend Figures are taken from cash flows statements.

Sources for 10-K are:- https://www.sec.gov/Archives/edgar/data/103379/000162828017002027/vfc1231201610-k.htm#s95D03BCAFC83AEC4CAF1226B70B4AE3E

https://investor.columbia.com/sec-filings/annual-reports/content/0001050797-17-000013/colm-20161231x10k.htm?

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ekkarill92 answered 2 years ago
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