American Eagle Outfitters Financial Ratios

Hired as the financial analyst for Baruch College Fund, we were tasked to analyze potential investment opportunities and present our research findings to our fund manager. We were assigned to analyze the financial positions of American Eagle Outfitters Inc. and The Buckle Company. A decision is needed to determine which company would yield a higher potential profit when selected as an investment. We will compare both companies based on their financial statements provided in their Form 10-K‘s. After comparing both of them, the company we recommend investing in is The Buckle Company rather than in American Eagle Outfitters, Inc. To determine the financial positions of the two retailer companies, we first need to analyze their financial

Compared to American Eagle Outfitters, Buckle Company reported $542,993,000 in Total Assets, $187,715,000 in Total Liabilities and $355,278,000 in Stockholder’s Equity, which is significantly less. Although American Eagle Outfitters reported higher liabilities, it doesn’t represent a higher chance of not repaying its debt and declaring bankruptcy. However, American Eagle Outfitters does have a lower Solvency Ratio, which compares Net Income to Total Liabilities to determine a company’s ability to pay off debts, compared to The Buckle Company. Based on this ratio, American Eagle Outfitters has a harder time paying off its debt. In American Eagle Outfitters’ income statement, referred to as the “Consolidated Statements of Income”, it reports a Gross Profit of $1,154,674,000 and Net Income of $80,322,000. In Buckle Company’s income statement, also referred to as the “Consolidated Statements of Income”, it reports a Gross profit of $507,332,000 and Net Income of $162,564,000. Although the Buckle Company has a lower Gross Profit but higher Net Income compared to American Eagle Outfitters, it doesn’t represent that American Eagle Outfitters are more