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Introduction to Financial Accounting

 

 

 

 

 

 

 

 

 

Introduction to Financial Accounting

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Introduction to Financial Accounting

  • The accounting standards used at Abercrombie and Fitch is SEC – Securities and Exchange Commission while Hennes & Mauritz use the IFRS – International Financial Reporting Standards.
  • Auditing standards used at Abercrombie and Fitch are in accordance to Public Company Accounting Oversight Board (United States) while Hennes & Mauritz used International Financial Reporting Standard.
  • When an investor visits the Abercrombie and Fitch website, the information given on it contains a lot of information from the company’s governance to the financial statements of the company that makes it easy for a person to analyze the information. The website contains useful information that a person need to know about them. The financial statement has a traditional format.
  • The Hennes & Mauritz website shows why the company exists, how long they have been in the market, the number of employees. The company website gives information about its financial position for the last five years. It has listed its top shareholders (Davis, 2010).
  • The website is very colorful. The financial report is done differently as it even has colored borders. The website is easily readable. Hennes & Mauritz financial statement is easy to read. The layout is user friendly (Hennes & Mauritz, 2012).
  • Both financial statements give important details about the organizations. They contain information that an investor can use to predict the future performance of the organizations. An investor is able to get a lot of information from both organizations.
  • From the information provided, a user can easily make a decision whether to invest or not. Both financial statements are done properly and thoroughly.
  • Both companies have given too many details especially on the financial, which can be confusing to a reader.

 

Balance Sheet for Abercrombie & Fitch

 

     
 

 

2011

2010

2009

Total Assets

      2,947,902

      2,821,866

      2,848,181

Total Liabilities

      1,057,118

        993,949

      1,002,603

Total Stockholder Equity

      1,890,784

      1,827,917

      1,845,578

Net Tangible Assets

      1,890,784

      1,827,917

      1,845,578

 

 

 

 

Income Statement for Abercrombie & Fitch

 

 

 

2011

2010

2009

Total Revenue

      3,468,777

      2,928,626

      3,484,058

Gross Profit

      2,212,181

      1,883,598

      2,331,095

Operating Income or Loss

        231,932

        117,912

        498,262

Net Income

        150,283

               254

        272,255

 

 

 

Cash Flow for Abercrombie & Fitch

 

 

2011

2010

2009

Net Income

        150,283

               254

        272,255

Total cash flow from Operating Activities

        391,789

        395,487

        491,031

Total cash flows from Financing Activities

       (145,333)

       (136,050)

          30,469

Change In Cash and Cash Equivalents

        156,403

        151,278

        404,273

 

Currency in USD                                                   

Retrieved from,

http://investing.money.msn.com/investments/stock-balance-sheet?symbol=ANF

 

Balance Sheet for Hennes & Mauritz

 

     
 

 

2010

2009

2008

Total  Assets

59,182

            54,363

            51,243

Total Liabilities

15,010

          13,750

          14,293

Total Equity

44,172

          40,613

          36,950

Total Liabilities & Shareholders Equity

 59,182

          54,363

          51,243

 

 

 

 

Income Statement for Hennes & Mauritz

 

 

 

2010

2009

2008

Gross Profit

          68,269

          62,474

54,468

Operating Profit

          24,659

          21,644

20,138

Profit After Financial Items

          25,008

          22,103

21,190

Profit for the period

          18,681

          16,384

15,294

 

 

 

 

Cash Flow for Hennes & Mauritz

 

 

 

2010

2009

2008

Cash Flow from current operations before changes in working capital

          22,621

          18,491

17,876

Cash Flow from current Operations

          21,838

          17,973

17,966

Liquid funds at beginning of the financial year

19,024

          22,276

16,064

Liquid funds at the end of the financial year

          16,691

          19,024

22,726

 

Currency in SEK

     

Retrieved from http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=HMB:SS

 

  • The company, which is most profitable, is Abercrombie and Fitch.
  • The currency used in trading is different. Abercrombie and Fitch is quoting in US Dollars while Hennes & Mauritz is quoting Swedish currency.
  • Hennes & Mauritz’s profits went down because the prices of cotton have gone up, high cost of transport and the Swedish currency had become stronger. Abercrombie and Fitch sales did not rise as expected because of their strategy in Europe.
  • Hennes & Mauritz is a domestic company while Abercrombie & Fitch is an international company. This makes profits from both companies have a big difference.
  • Hennes & Mauritz customers are mainly the local people while Abercrombie and Fitch also targets international customers as well as local people. This makes the profit margins different.
  • Hennes & Mauritz products are more affordable compared to those of Abercrombie & Fitch. Hennes & Mauritz Company is very profitable. Their revenues are approximately US dollars 16 billion.
  • Abercrombie and Fitch emphasizes on the label and customer experience (Abercrombie & Fitch, 2004). Their total sales is approximately US dollars 2.9 billion with income totaling to US dollars 254,000.
  • The information used is retrieved from the Abercrombie & Fitch website and the Hennes & Mauritz website.

 

Hennes & Mauritz AB-B SHS (2012) Bloomberg Business Week, Retrieved from http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=HMB:SS

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