Running Head: ACCOUNTING

Financial Analysis
Students Name
University Name

Running Head: ACCOUNTING

2
2014

2015

2016

62.56

61.79

61.32

Return on Asset

1.87

1.94

1.44

Return on Equity

3.08

3.22

2.65

Current Ratio

2.32

2.40

2.2

Quick Ratio

1.18

1.18

1.21

Asset Turnover

1.41

1.40

1.43

Inventory Turnover

3.22

2.89

3.03

49.13

61.95

64.11

1.65

1.80

1.88

3.42

Profitability
Gross Margin

Liquidity

Turnover Ratios

Accounts Receivable Turnover

Solvency
Debt-to-Equity
Interest Coverage Ratio

Abercrombie &Fitch

PricewaterhouseCoopers at present reviews Abercrombie and Fitch's yearly reports and

timetables. It frequently investigates at a few unique parts of the organization utilizing essential
and propelled bookkeeping standards to decipher the organization's present circumstance.
PricewaterhouseCoopers makes point by point monetary records, explanations of wage,

Running Head: ACCOUNTING

shareholders' value structures and income archives to give an account of the money related
position of Abercrombie and Fitch Co.
One of the essential issues that clarifies the present and future consequences of operations
with Abercrombie and Fitch is that the wellspring of money was driven by an adjustment in stock
and lessened records payable and not because of an expansion in deals income. Another issue is
the lessening of benefits from U.S stores. Since a majority of A&F stores are situated in the US,
this implies a considerable lot of their stores are not producing critical benefit. Another issue is
that A&F are opening uber stores abroad in exceptionally costly retail stores, for example, Seoul
and Dubai. A&F has additionally been repurchasing shares of their stock keeping in mind the end
goal to counterbalance the abatement of stock worth. In conclusion, the abroad development
makes A&F extremely powerless to remote trade rates changes.
Abercrombie and Fitch Company has had a troublesome time staying reliable in it's deals
and benefits. As the 10K appears, the organization's net salary has changed between 3-5% all
through the recent years. Alongside an examination of the 10 year rundown which demonstrates
an expansion in deals, in any case, conflicting, best case scenario, can without much of a stretch
swing the organization forward and backward between being in a position of obligation and
being in a position of benefit (Kell, 2015). As of late, Abercrombie and Fitch has managed a few
issues that have prompted a diminishing in enthusiasm from purchasers in the United States. It's
higher cost and higher norms has killed huge gatherings of individuals from needing their item.
Thus, Abercombie and Fitch Co's. viewpoint has changed significantly from only several years
prior. In 2007, one of the organizations most grounded years, A&F's net wage was over $475
million. Starting 2013 the organizations net wage was simply over $54 million for the whole
year. Moreover, A&F's present liabilities are much bigger than their 2007 liabilities. In 2007 the

Running Head: ACCOUNTING

organization had just 949 million in liabilities, though in 2013 the organization had more than
1.17 billion in liabilities (Banay, 2007). It's colossal fall in net salary and also deals and income,
persuades that this organization is stuck in a descending winding that can prompt the
organization requiring extra obligation subsidizing to back its operations.
Because of Abercrombie and Fitch's solid universal nearness, the organization makes a
particular budgetary sheets every year that makes reference to International Financial Reporting
Standards (IFRS). Worldwide Financial Reporting Standards are a typical arrangement of
guidelines set up together for organizations to represent their advantages in a justifiable and
practically identical measure. Abercrombie and Fitch records salary explanations, accounting
reports, money streams articulations and different proclamations with both UK GAAP principles
and in addition the International Financial Reporting Standards. The GAAP norms are not quite
the same as IFRS in that it concentrates on certain functional circumstances. These records are
made independently and show little distinction between the two principles, both speaking to a
money related year of 52 weeks (Fashion United, 2014). A&F's alterations, norms and translation
being received, takes after the IFRS understandings. Every one of these benchmarks and
revisions don't have any noteworthy effect on the net resources of the Abercrombie and Fitch.

Running Head: ACCOUNTING

5
2014

2015

2016

Gross Margin

38.97

38.27

36.21

Return on Asset

16.71

16.24

12.13

Return on Equity

42.98

41.75

33.29

Current Ratio

1.81

1.93

1.57

Quick Ratio

0.81

0.87

0.65

Asset Turnover

2.11

2.12

2.08

Inventory Turnover

5.35

5.32

5.36

40.73

44.60

56.72

0.45

0.45

0.51

35.31

27.84

25.93

Profitability

Gap

Inc.

Liquidity

Turnover Ratios

Accounts Receivable Turnover

Solvency
Debt-to-Equity
Interest Coverage Ratio

The Gap, Inc. (GPS) is a garments retailer situated in the United States, working 3,085
retail locations under three unmistakable attire brand names - "Gap", spending plan brand "Old
Navy", and urban chic brand "Banana Republic". Other brand expansions incorporate GapBody,
GapKids, and BabyGap. The Gap works 2,753 stores in the U.S., Gap and Banana Republic
additionally has 332 store areas abroad in the UK, Canada, France, and Japan. The Gap brand's
principle center is easygoing clothing focused at customers between the ages of 18 and 25
(Sciacca, 2015). Moreover, The Gap has stores using the Gap brand which target smaller portions
of the retail attire industry, including GapKids, BabyGap, and GapBody. The Gap has the biggest
impression of the three brands both in the US and globally, working 1,142 stores in North
America and 301 stores universally as of May 2010.

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The economy neglected to enhance in 2009, driving The Gap to diminishing its working
costs. In March GPS chose to diminish the extent of its board to 10 individuals from 13 and will
cut stock remuneration for the remaining individuals by 15%. The director and CEO has
additionally chosen to cut his pay by 15% and Gap has gotten rid of legitimacy based rewards for
home office workers.
The present proportion and the snappy proportion are great pointers of the organization's
liquidity. The present proportion for the year 2014 is 1.81 and for 2016 1.57. It demonstrates
that there are sufficient current resources accessible to meet current liabilities with recompense
for an edge of security. The fast proportion was underneath 36.21 in 2016, which implies that the
organization couldn't meet rapidly its commitments and this could be am sign for issues. It went
up to 38.91 in 2014, so now the organization can cover its present liabilities without the offer of
stock, however it is still under the business normal of 1.7. Stock turnover proportion was 6.03
and 5.68 throughout the previous two years which contrasted with the business normal of 5.1
shows great merchandizing and higher benefits (Holmes, 2011).
Gap Inc has expanded its net revenue from 38.97% in 2014 to 36.21% in 2016. It is
higher than the business normal and the overall revenue of its rivals. The organization could
diminish the expense of merchandise sold from 10,071B in 2014 to 8,473B in 2015 and despite
the fact that the deals went somewhat down, the gross edge went up by 4% achieving 40.3% in
2009. We can contrast this proportion with the business normal of 39.9% and the gross edge of
the organization's top rivals - 26.20% for TJX, 33.86% for AEO, and 44.08% for JCG (Edelson,
2014). The solid appearing of the organization's benefit and gross edge proportions demonstrates
that the organization is recouping and fortifying its positions.

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Resource turnover proportion went down from 5.32 in 2014 to 5.36 in 2016, which is
beneath some of its rivals' advantage turnover proportion however marginally over the business
normal. With the overall revenue going up we could expect this lessening in the benefit turnover
proportion however it is still moderately high due to the focused evaluating in the retail business.
Net deals went marginally down in the course of the most recent 3 years, and this is valid for the
business in general, while the aggregate resources of Gap Inc went up. It shows that the capacity
of the organization to produce deals from its benefits diminished, which is because of abundance
limit and the financial conditions in the course of the most recent three years (Duxbury, 2006).
The arrival on resource proportion went up by 2.11% in 2014, however is still lower than
the organization's rivals' proportion (TJX - 18.27%, JCG - 23.17%) and higher than the business
normal (11.8%), which demonstrates that TJX and JCG perform better in changing over their
ventures into benefit. The arrival on value proportion has additionally been going consistently
down throughout the previous three years from 42.98% in 2014 to 33.29% in 2016, but on the
other hand is low beneath its rivals' proportion (TJX - 46.87 %, JCG - 41.49%), who are clearly
creating benefits all the more proficiently and are having an upper hand. Another proportion that
demonstrates that Gap is not as productive as some of its rivals is EPS which has been going up
throughout the previous 3 years from 0.45 in 2014 to 0.51 in 2016, yet stays beneath the level of
EPS of Gap's top rivals - TJX and JCG (Poulter, 2007).
Crevice's income from operations reported noteworthy development throughout the
previous three years. The net money gave by the working exercises expanded from $833 million
in 2007 to $967 million in 2008 to $1,102 million in 2014. Gap's solid money position furnishes
the organization with a solid monetary base to seek after its development arranges. Gap is
fiscally utilized to a decent degree. The organization's obligation to value proportion diminished

Running Head: ACCOUNTING

from 42.98 in 2014 to 33.29 in 2016. This is basically because of a decline in the long haul
obligation as of late. The organization's capacity of paying its obligation is additionally
demonstrated by its high intrigue scope proportion. Diminished long haul obligation facilitates
the obligation weight and gives the organization a more noteworthy chance for future
development.
The retail business is described by a substantial number of players; a hefty portion of
whom have an overall nearness. Crevice rivals national and neighborhood departmental stores,
grocery stores, autonomous retail locations and web organizations, which offer comparable lines
of items. Despite the fact that the extensive rivalry in the business and the grievous monetary
conditions in the most recent 3 years, the organization oversaw is building money related quality,
as every single budgetary proportion are demonstrating change and are over the business normal
levels. Therefore we can reason that the organization could be a decent venture. We need to
remember, in any case, that expanding rivalry because of new bigger participants can influence
the organization's overall revenues and piece of the overall industry later on.

Works Cited:
Banay, Sophia. "Top Company Profiles Abercrombie & Fitch". Portfolio.com. Archived
from the original on June 22, 2007. Retrieved July 19, 2007.

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"Abercrombie Kids lands in the UK with debut store opening". Fashion United.
Retrieved September 4, 2014.
Duxbury, Sarah (October 6, 2006). "Piperlime the shoe fits, Gap wears it". San Francisco
Business Times. Retrieved August 21, 2009.
Poulter, Sean (April 6, 2007). "The Trendy US Gear That Costs Double Over Here".Daily
Mail (London). Retrieved October 28, 2011.
Holmes, Elizabeth (May 6, 2011). "Revolving Door Spins at Gap". The Wall Street Journal.
Edelson, Sharon (February 10, 2014). "Gap Readies Minimum Wage Increase". WWD.
Retrieved February 20, 2014.
Kell, John (April 24, 2015). "Abercrombies shirtless models are about to cover up". Fortune.
Retrieved July 9, 2015.
Sciacca, Annie (August 27, 2015). "Gap decides not to keep its store workers waiting".San
Francisco Business Times. Retrieved August 28, 2015.