Let’s look at Dick’s Sporting Goods (Dick’s) one last time. Think about Dick’s and how everything you’ve learned comes together. 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 does Dick’s need to operate? Think about the business of Dick’s. Return to Dick’s Annual Report and look at the company’s financial statements (see the Continuing Financial Statement Analysis Problem in Chapter 2 for instructions on how to access the Annual Report).

Now answer the following questions:

1. Compute the ratios included in Exhibit 12-10 for Dick’s for the year ending January 28, 2017. Assume all sales are on credit.

2. Compute Dick’s ROE for the year ending January 28, 2017, including the elements of net income , sales, sales , average total assets, and average total assets , average stockholders’ equity. What does this analysis tell you about how Dick’s generates its ROE?

3. What are Dick’s DPS and dividend payout ratio for 2016? Why do you think Dick’s pays a dividend? How do you think Dick’s determines the amount of dividend it will pay?

4. Given Dick’s stock price was $52.17 per share on January 28, 2017, what was Dick’s PE ratio as of that date? If the average PE ratio for companies is 17, what does this tell you the market is saying about Dick’s future?

5. Reviewing your answers to questions 1 through 4, how do you think Dick’s is performing? Would you buy Dick’s stock? If so, why? If not, why not? Do you have any ideas how to improve Dick’s performance and its value?