American Eagle vs. Urban Outfitters - 1647 Words

American Eagle Vs Urban Outfitters Introduction Financial ratio’s / accounting ratio’s are best described as being â€Å"the relative magnitude of two or more selected numerical values taken from an enterprise’s financial statements (Libby, Libby, Libby amp; Short, 2011),† in order to evaluate the overall financial condition of a business. Whether they are viewed by stakeholders within a firm, or current and potential stakeholders outside of the enterprise, financial ratios can used to compare the strength of a company against its own performance objectives, or in comparison to those of its leading competitors within the industry. In this paper, we compare Urban Outfitters and American Eagle against each other†¦show more content†¦As can be seen in the Debt/Equity comparison chart above, Urban Outfitters has the lowest Debt/Equity ratio of the three, which means that instead of having to use its scarce resources to pay back high levels of principal and interest on its long-term financial oblig ations, it can instead return a higher percentage of its revenue for the period to its shareholders. An action that rest assured will be reviewed very positively by stakeholders and investors in the company. Profit | Urban Outfitters | American Eagle | Industry Average | Profit margin | 10.9% | 6.0% | 3.8% | Return on equity | 20.9% | 13.0% | 13.1% | Earnings per share | $1.02 | $0.87 | N/A | Profitability ratios provide insight into how much profit a company generates with the money that shareholders have invested in the company. Profit margin, return on equity, and earnings per share are all forms of profitability ratios (Stocks Simplified, 2011). With its 10.9% profit margin ration, Urban Outfitters is substantially more effective than American Eagle Outfitters at controlling its costs. Calculated as net income divided by revenue, or net profit divided by sales, â€Å"the profit margin ratio is a measurement of how much out of every dollar of sales a company actually keeps in earnings† (Stocks Simplified,Show MoreRelatedMarketing Channel44625 Words   |  179 PagesAnswer: C Diff: 3 Page Ref: 387 AACSB: Use of IT Skill: Concept Objective: 13-3 56) Most ________ retailers are significantly behind ________ retailers in global expansion. A) African; Peruvian B) European; American C) American; European and Asian D) Asian; American E) Asian; African Answer: C Diff: 3 Page Ref: 388 AACSB: Multicultural and Diversity Skill: Concept Objective: 13-3 57) ________, the world s second largest retailer after Wal-Mart, has embarked on an aggressive