Let’s consider Dick’s Sporting Goods (Dick’s) again. Think about Dick’s. Think about accountants reporting what Dick’s has, where it got its money, and what it has been doing to create value. Is Dick’s earning net income or loss? What resources did Dick’s need to operate? Think about the business of Dick’s.

Return to Dick’s financial statements contained in its Annual Report (see the Continuing Financial Statement Analysis Problem in Chapter 2 for instructions on how to access the Annual Report). Go to page 40, where you will find Dick’s income statement for the year ending January 28, 2017 (called the Consolidated Statement of Income).

Now answer the following questions:

1. Look at Dick’s income statement. What are Dick’s sales for the past two years? Are sales increasing or decreasing compared with the previous year?

2. Look at Dick’s income statement. Dick’s had 797 stores at the end of 2016 (as of January 28, 2017) and 741 stores at the end of 2015 (as of January 30, 2016). What were Dick’s sales per store in 2016 and 2015? (Divide total sales by the number of stores Dick’s operated in that year.) Are sales per store increasing or decreasing?

3. Look at Dick’s income statement. What is Dick’s gross profit and gross profit percentage for the years ending January 28, 2017, and January 30, 2016? Is Dick’s gross profit increasing or decreasing?

4. Look at note 1 accompanying the financial statements (pages 45 through 50 of annual report). How is Dick’s accounting for sales (revenue) and costs?

5. What is Dick’s net income percentage for the years ending January 28, 2017, and January 30, 2016? Is Dick’s net income percentage increasing or decreasing?

6. Looking back over your answers to questions 1 through 5, how do you think Dick’s is performing? What do you think is causing the changes in Dick’s sales, costs, and margins?