Use Foot Locker, Inc.'s balance sheet and other information provided on the next page to answer title following questions.

a. Compute Foot Locker's working capital in 2015 and 2014.

b. Compute Foot Locker's current ratio in 2015 and 2014.

c. Comment on what the working capital and current ratio indicate about Foot Locker in 2015 and 2014.

d. Compute Foot Locker's debt-to-equity ratio for 2015 and 2014. Comment on what the debt-to-equity ratio indicates about Foot Locker in 2015 and 2014.

e. Use DuPont analysis to decompose Foot Locker's return on equity into return on assets and financial leverage. Foot Locker's net income in 2015 was $541 million.

Comment on the effect of financial leverage on return on equity.

Transcribed Image Text:

Foot Locker, Inc. CONSOLIDATED BALANCE SHEETS 2015 2014 (in millions) ASSETS Current Assets $ 967 $1,021 Cash and cash equ valents 1,285 1,250 Merchandise inventories Other current assets 300 239 2,606 Total Current Assets 2456 Property and Equipment- net 661 620 Deferred Taxes 234 221 156 Goodwill 157 Other intangible Assets - net 45 49 Ot her Assets 73 74 $3.775 Total Assets $3,577 LIABILINES AND SHAREHOLDERS' EQUITY Current Liablities $ 279 $ 301 Accounts payab e Accued and other liab fties 393 420 Current portian of capital lease obigat ons Total Current Liabilities 700 696 132 Long Term Debt and Obligations under Capital Lea ses 129 Ot her Liabilities 393 253 1,222 Total Liabilities 1,081 Totał Shareholders' Equity 2,553 2,496 Total Liabilities and Shareholders' Equity $3.577 $3,775