A.Using the two stocks you identified(American Eagle Outfitters, Inc and Apple Inc.) determine the free cash flow from 2013 & 2014. What inference can you draw from the companies’ free cash flow?
B. Using the 2016 & 2017 financial statements for both stocks, prepare two financial ratios for each of the following categories: liquidity ratios, asset management ratios, and profitability ratios. You should have a total of six ratios for each stock, per year. What challenges, strengths, or weaknesses do you see? Please be articulate.
calculate FCF years 2013 and 2014. So go to the website of each company and get the annual reports of year 2014. (part A) and year 2017 (Part B)
FCF = NOPAT – additional investment in operational capital
NOPAT = EBIT (1-Tax rate) use 2014 data.
Additional operational capital = AAA —- BBB
AAA = [ (cash+inventory+Account Rec) — (Accounts payable + Accruals) ] + Net Fixed assets all from 2014 data
BBB = [ (cash+inventory+Account Rec) — (Accounts payable + Accruals) ] + Net Fixed assets all from 2013 data
B) get the annual reports of 2018. you have the financial statement of 2017 and 2018.
Calculate two ratios of each category (3 categories) for each company for each year.
Go to the income statement.
go down to see the following:
EBIT Earnings before INTEREST and TAXES
EBT Earnings before taxes
NI Net income
to get the Tax rate = Taxes/Earnings before taxes = T/EBT
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