Question

Exercise 2-11

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		$ 988,800		$963,900
Total assets		1,940,000		1,866,000
Current liabilities		412,000		357,000
Total liabilities		566,480		544,872
Net income		165,600		347,200
Net cash provided by operating activities		283,000		490,800
Capital expenditures		250,000		284,800
Dividends paid on common stock		78,000		109,300
Weighted-average shares outstanding		207,000		217,000

(a)

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

		2017			2016
Current ratio			: 1			: 1

(b)

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

		2017			2016
Earnings per share		$			$

(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			%			%

(d)

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

		2017		2016
Free cash flow		$		$

Answer 1

(a)		2017	2016
	Current ratio	2.40 : 1	2.70 : 1
		=988800/412000	=963900/357000
(b)		2017	2016
	Earnings per share	0.80	1.60
		=165600/207000	=347200/217000
(.c )		2017	2016
	Debt to total assets ratio	29.2%	29.2%
		=566480/1940000	=544872/1866000
(d)		2017	2016
	Free Cash flow $	33	206
		=(283000-250000)/1000	=(490800-284800)/1000