Declaring bankruptcy to provide financial protection


Problem: Aeropostale, Inc. (AROPQ) is a specialty retailer of casual apparel and accessories for teens. Recently, the company declared bankruptcy to provide financial protection while attempting to reorganize its operations. Annual report information for the three most recent years prior to the bankruptcy are as follows (in millions): Line Item Description Year 3 Year 2 Year 1 Net cash flows used for operating activities $(68) $(56) $(38) Cash used to purchase property, plant, and equipment (16) (24) (84) Sales 1,507 1,839 2,091 a. Determine the free cash flow. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Enter answers in millions. Year 3: fill in the blank 1 of 3$ Year 2: fill in the blank 2 of 3$ Year 1: fill in the blank 3 of 3$ b. Determine the ratio of free cash flow to sales. Round percentages to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Year 3: fill in the blank 1 of 3 % Year 2: fill in the blank 2 of 3 % Year 1: fill in the blank 3 of 3 %

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Accounting Basics: Declaring bankruptcy to provide financial protection
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