Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 6, Problem 1FSC
Use Foot Locker. Inc.’s balance sheet and other information provided on the next page to answer the following questions
- a. Compute Foot Looker's
working capital in 2015 and 2014. - b. Compute Foot Looker’s
current ratio in 2015 and 2014. - c. Comment on what the working capital and current ratio indicate about Foot Locker in 2015 and 2014.
- d. Compute Foot Locker’s debt-to-equity ratio for 2015 and 2014 Comment on what the debt-to-equity ratio indicates about Foot Locker in 2015 and 2014.
- e. Use DuPont analysts to decompose Foot Locker’s return on equity into return on assets and financial leverage Foot Locker’s net income in 2015 was $541 million. Comment on the effect of financial leverage on return on equity.
Foot Locker, Inc. CONSOLIDATED BALANCE SHEETS |
||
2015 | 2014 | |
ASSETS | (in millions) | |
Current Assets | ||
Cash and cash equivalents | $1,021 | $ 967 |
Merchandise inventories | 1,285 | 1.250 |
Other current assets | 300 | 239 |
Total Current Assets | 2,606 | 2.456 |
Property and Equipment - net | 661 | 620 |
234 | 221 | |
166 | 157 | |
Other Intangible Assets - net | 45 | 49 |
Other Assets | 73 | 74 |
Total Assets | $3,775 | $3.577 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Current Liabilities | ||
Accounts payable | $ 279 | $ 301 |
Accrued and other liabilities | 420 | 393 |
Current portion of capital lease obligations | 1 | 2 |
Total Current Liabilities | 700 | 696 |
Long-Term Debt and Obligations under Capital Leases | 129 | 132 |
Other Liabilities | 393 | 253 |
Total Liabilities | 1,222 | 1,081 |
Total Shareholders' Equity | 2,553 | 2,496 |
Total Liabilities and Shareholders' Equity | $3,775 | $3,577 |
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Chapter 6 Solutions
Intermediate Accounting (2nd Edition)
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