Accounting Ratios Term Paper - Grade: a

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Financial Analysis and Comparison of American Eagle Outfitters Incorporated & Staples Incorporated

Accounting XXXX: Term Paper
XXXXXXX
11.26.2010

Table of Contents
Table of Contents…………………………………...…2 Introduction…………………………………………..…3 Financial Trends……………………………………….3 Staples Background………………..…………………3 American Eagle Outfitters Background………4
Business Environments…………………………….4
Return on Equity Ratio……………………………..5
Return On Assets Ratio………………………..……6
Gross Profit Margin…………………………….…….7 Net Profit Margin……………………………...………8 Current Ratio………………………………………...…9 Debt to Equity Ratio………………………..………10 Inventory Turnover Ratio……………………….11
Accounts Payable Turnover Ratio…………....13
Quality of Income Ratio…….……………………..14
Analysis and Conclusion………………………….15
Bibliography……………………………….…………..17 End Note References……………………………….17
Appendices A1-A9……………………………...18-26
AEO Inc. Financial Documents……..……...27-31
Staples Financial Documents……………….32-37

Introduction
In this document the financial performance of American Eagle Outfitters Incorporated and Staples Incorporated will be evaluated, compared, and discussed in detail. The goal of this paper is to facilitate an understanding of the financial strategies applied by these retailers and the resultant effect on their bottom line profitability. Using strategies learned in Accounting 5121, standard financial practices are implemented to determine the financial health and profitability of these two companies. Financial Trends

Financial analysis in this paper is primarily discussed with respect to key financial ratios, which are calculated from annual 10K reports. Two-year ratio trends are calculated in the appendices and reported in the body of this paper in graphical form. These ratios were calculated from 10Ks published at the end of the 2008 & 2009 fiscal years. As such, the trend graphs represent the final financial standings at the end of these two fiscal years. Company Background and General Practices: Staples Inc.

Staples Incorporated is one of the world’s leading office supply and service companies. Staples has a diverse product offering including office products, technology, furniture, and business services that include delivery and printing services. The company was founded with a single store in 1986 in Brighton Massachusetts and has expanded to own and operate approximately 2100 retail stores and 20 stand-alone print shops in 25 countries. Staples reaches most parts of the large and diversified office supplies and service market. This is accomplished through product diversification and customized sales channels. Currently, Staples offers approximately 15,000 different products though their retail, catalog, and on-line sales outlets. Staples believes they provide superior value by offering a combination of low prices and high quality on a wide selection of products which can be easily obtained at conveniently located retail stores or on easy to use websites. Another value Staples retail stores offer is the “in-stock” guarantee which states that all standard product offerings will have backup stock in the retail stores and distribution centers to ensure that products can be obtained by the customer in a timely manner. Delivery operations target mid-sized businesses that are repeat customers. Delivery sales dominantly occur online or through direct mail catalogs. Print service is a growth area for Staples. Increasing demand has lead the company to open 20 domestic stand-alone print service locations. North American retail business offers easy-to-shop stores with high quality office supplies with an in-stock guarantee. Company Background and General Practices: American Eagle Outfitters Inc. American Eagle Outfitters is a leading retailer of trendy apparel and accessories. The company was founded in 1977 and currently operates more than 1000 retail outlets in the Unites States and Canada. The company also maintains an online sales presence with...
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