CP3-2 Finding Financial Information. . CP3-2 Finding Financial Information LO3-2, 3-4, 3-6 Refer to the financial statements of Urban Outfitters in Appendix C at the end of the book

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CP3-2 Finding Financial Information LO3-2, 3-4, 3-6

Refer to the financial statements of Urban Outfitters in Appendix C at the end of the book.
Required:

1. What is the company's revenue recognition policy? (Hint: Look in the notes to the financial statements.)

2. Assuming that $50 million of cost of sales was due to noninventory purchase expenses (distribution and occupancy costs), how much inventory did the company buy during the year? (Hint: Use a T-account of inventory to infer how much was purchased.)

 
INVENTORY (in thousands)
  
 
 
 
 
 
 
 
 
 
 
 
 

 

 
Inventory purchased during the year:
 

 

3. Calculate selling, general, and administrative expenses as a percent of sales for each year presented. (Dollars in thousands.)
Year Ended
SG&A Expenses /
Net Sales Revenue
 = Percentage
2012
 
 
 
2011
 
 
 
2010
 
 
 

 

By what percent did these expenses increase or decrease from fiscal years ended 2011 and 2012 and between 2010 and 2011? (Hint: Percentage Change = [Current Year Amount − Prior Year Amount]/Prior Year Amount.)
  
 % Change
Incr. or Decr.
Between years ended 2011 and 2012:
 
 
Between years ended 2010 and 2011:
 
 

 

4. Compute the company's net profit margin for each year presented. (Dollars in thousands.)
Fiscal Year Ended
Net Income /
Net Sales (or Operating) Revenues
= Net Profit Margin Ratio
2012
 
 
7.5%
2011
 
 
 
2010
 
 
 

 

Explain net profit margin ratio and discuss the results shown above.
 

 

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