compare and contrast the companies and write a small report

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A.Urban Outfitters- Kayla Richards

1. Long-Lived Assets20192018

Land 27,083 21,310

Buildings 347,468 305,883

Furniture & Fixtures 438,163 439, 729

Leasehold Improvements 922,884 921,629

Other Operating Equipment 323, 298 300,304

Construction in Progress 22,163 34,913

2. Urban Outfitters states their “property and equipment are stated at cost and primarily consist of store leasehold improvements, furniture and fixtures, buildings and other operating equipment. Depreciation is computed using the straight-line method over the lesser of the lease term or useful life for leasehold improvements, five years for furniture and fixtures, 39 years for buildings and three to ten years for other operating equipment. Major renovations or improvements that extend the service lives of our assets are capitalized over the lesser of the extension period, life of the improvement, or the remaining term of the lease.”

3. Accumulated Depreciation/Cost

Accumulated Depreciation 2019 = 1,285,030 2018 = 1,210,000

Cost 2019 = 2,081,059 2018 = 2,023,768

2019 = 6.17% 2018 = 5.97%

4a. The fixed asset turnover ratio is used to determine operating performance and measures a company’s ability to generate net sales from its fixed-asset investments.

4b. Sales/Average Fixed Assets

Sales 2019 = 3,950,623 2018 = 3,616,014

Average Fixed Assets 2019 = 2,160,515 + 2018 = 1,952,780

/2 = 2,056,647.5

2019 = 1.92% 2018 = 1.75%

4c. Since the fixed asset turnover ratio improved from 2018’s 1.75 to 2019’s 1.92, this suggest that this works in favor of Urban Outfitters.

4d. There is no additional information for the textile industry fixed asset turnover ratio. Therefore, it can be assumed that the industry shares a similar ratio of 1.92 just as Urban Outfitters of 2019.

B. Old Navy – Daphterlie Louis

Property, plant,equipment 2020-01-31 $3,122 mil 2019-01-31 $2,912 Mil, 2018-01-30 $2,805 Mil

Total current assets 2020-01-31 $4,516 Mil, 2019-01-31 $4,251 Mil, 2018-01-31 $4,315 Mil

2020 $13,679 Mil

2019 $8,049 Mil

2018 $7,989 Mil

Gap has a lot of company-operated stores in Us, Canada, France, Irland, Japan, Italy, China, Hong Kong, Taiwan, and Mexico

Date current Assets Current Liabilities Current ratio

2020-01-31 $4.52B $3.21B 1.41

2019-10-31 $4.57B $3.19B 1.43

2019-07-31 $4.57B $3.13B 1.46

Their current assets/current liabilities are similar

C. H&M – Chenxi Xiu

2017

Property/plant and equipment=(39818/106562)*100=37.37%

Goodwill=(64/106562)*100=0.06%

Intangibles=(6979/106562)*100=6.55%

Long term investment=(1039/106562)*100=0.98%

Note receivable-long term=(1039/106562)*100=0.98%

Other long term assets=(2916/106562)*100=2.74%

2018

Property/plant and equipment=(42439/106562)*100=39.83%

Goodwill=(64/106562)*100=0.06

Intangibles=(9554/106562)*100=8.97%

Long term investment=(478/106562)*100=0.45%

Note receivable-long term=(885/106562)*100=0.83%

Other long term assets=(3794/106562)*100=3.56%

2019

Property/plant and equipment=(40892/106562)*100=38.37%

Goodwill=(64/106562)*100=0.06%

Intangibles=(11384/106562)*100=10.68%

Long term investment=(639/106562)*100=0.60%

Note receivable-long term=(912/106562)*100=0.86%

Other long term assets=(4322/106562)*100=4.06%

Allocation method

Property/plant and equipment=straight-line depreciation

Goodwill=direct

Intangibles=direct

Long term investment=direct method

Note receivable-long term=direct method

Other long term assets=straight line depreciation

The percentage of property, plant and equipment for 2019 = (Accumulated depreciation/cost)=(40031/80922)*100=49.47%

The fixed asset ratio is used to measure a company’s return on investment in property, plant and equipment. It is done by comparing the net sales with the fixed assets. It shows how efficient is the company’s plant, property and equipment in producing sales.

2017

Fixed asset turnover ratio=net sales/total property plant and equipment=(200004/39818)=5.02

2018

Fixed asset turnover ratio=net sales/total property plant and equipment=(210400/42439)=4.96

2019

Fixed asset turnover ratio=net sales/total property plant and equipment=(232755/40892)=5.69

The ratios increased from 2017 to 2019. In this case, the company’s efficiency to use its property, plant and equipment in producing sales is therefore increasing. The latest fixed asset turnover ratio for the retail industry is 2.31. The higher fixed asset ratio above the industry can be attributed to competitive advantage that allows the company to have huge sales. It shows that H&M uses its fixed assets efficiently.

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