6. Calculate the price/earnings ratio for as many of the past three years as you can.
7. Calculate the dividend payout and dividend yield ratios for as many of the past three years as you can.
8. Based on the results of your analysis above, assess the company's overall profitability. Explain which ratios indicate particular strengths and/or weaknesses within the company. Assume the following industry averages: ROI = 15%; Margin = 10%; Turnover = 1.5; ROE = 20%; Price/earnings = 14.0; Dividend payout = 40%; Dividend yield = 5%.
9. As an investor in this company's stock, would you be pleased with this year's dividend yield? How would your dividend yield "expectations" change, if at all, if the company's ROI was 5% higher? Explain.
*look up target financials if needed*
ROI
2017-2018: 13.15%
2016-2017: 11.64%
2015-2016: 13.12%
ROE
2017-2018: 26.03%
2016-2017: 23.70%
2015-2016: 24.76%
Consolidated Statements of Operations Consolidated Statements of Financial Position Consolidated Statements of Cash Flows Changes in operating accounts: C--alidatand Statemants of Shareholders' Investment Consolidated Statements of Financlal Position 18. Accrued and Other Current Liabilities We retain a substantial portion of the risk felated to general liabilty and rokers' comoesabon clains. Liabilies associated with these losses include estimates of both claims fled and losses incurred but not yet reported. We estmate cur ultimate ceat based on analysis of historical data and actuarial estimates. Genocal lability and woikons copmeencition labilties are recorded at cur estimate of their net present value. 19. Commitments and Contingencies Contingencies We are exposed to claims and litigation arising in the ordinary course of business and use various methods to resolve these matters in a manner that we believe serves the best interest of our shareholders and other constituents. When a loss is probable, we record an accrual based on the reasonably estimable loss or range of loss. When no point of loss is more likely than another, we record the lowest amount in the estimated range of loss and, if material, disclose the estimated range of loss. We do not record liabilities for reasonably possible loss contingencies, but do disclose a range of reasonably possible losses if they are material and we are able to estimate such a range. If we cannot provide a range of reasonably possible losses, we explain the factors that prevent us from determining such a range. Historically. adjustments to our estimates have not been material. We believe the recorded reserves in our consolidated financial statements are adequate in light of the probable and estimable liabilities. We do not believe that any of these identified claims or litigation will be material to our results of operations, cash flows, or financial condition. Commitments Purchase obligations, which include all legally binding contracts such as firm commitments for inventory purchases, merchandise royalties, equipment purchases, marketing-related contracts, software acquisitionilicense commitments, and service contracts, were $1,225 million and $1,762 million at February 3, 2018 and January 28, 2017, respectively. These purchase obligations are primarily due within three years and recorded as liabilities when inventory is received or services rendered. We issue inventory purchase orders, which represent authorizations to purchase that are cancelable by their tems. We do not consider purchase orders to be firm inventory commitments. If we choose to cancel a purchase order, we may be obligated to reimburse the vendor for unrecoverable outlays incurred prior to cancellation. Real estate obligations, which include commitments for the purchase, construction or remodeling of real estate and facilities, were $716 million and $268 milion at February 3,2018 and January 28, 2017, respectively. These real estate obligations are primarily due within one year, a portion of which are recorded as labilities. We issue letters of credit and surety bonds in the ordinary course of business. Trade letters of credit totaled $1,757 million and $1,330 million at February 3, 2018 and January 28, 2017, respectively, a portion of which are reflected in accounts payable. Standby letters of credit and surety bonds, relating primarily to insurance and regulatory requirements, totaled $372 million and $463 million at February 3,2018 and January 28, 2017, respectively. Consolidated Statements of Operations Consolidated Statements of Financial Position Consolidated Statements of Cash Flows Changes in operating accounts: C--alidatand Statemants of Shareholders' Investment Consolidated Statements of Financlal Position 18. Accrued and Other Current Liabilities We retain a substantial portion of the risk felated to general liabilty and rokers' comoesabon clains. Liabilies associated with these losses include estimates of both claims fled and losses incurred but not yet reported. We estmate cur ultimate ceat based on analysis of historical data and actuarial estimates. Genocal lability and woikons copmeencition labilties are recorded at cur estimate of their net present value. 19. Commitments and Contingencies Contingencies We are exposed to claims and litigation arising in the ordinary course of business and use various methods to resolve these matters in a manner that we believe serves the best interest of our shareholders and other constituents. When a loss is probable, we record an accrual based on the reasonably estimable loss or range of loss. When no point of loss is more likely than another, we record the lowest amount in the estimated range of loss and, if material, disclose the estimated range of loss. We do not record liabilities for reasonably possible loss contingencies, but do disclose a range of reasonably possible losses if they are material and we are able to estimate such a range. If we cannot provide a range of reasonably possible losses, we explain the factors that prevent us from determining such a range. Historically. adjustments to our estimates have not been material. We believe the recorded reserves in our consolidated financial statements are adequate in light of the probable and estimable liabilities. We do not believe that any of these identified claims or litigation will be material to our results of operations, cash flows, or financial condition. Commitments Purchase obligations, which include all legally binding contracts such as firm commitments for inventory purchases, merchandise royalties, equipment purchases, marketing-related contracts, software acquisitionilicense commitments, and service contracts, were $1,225 million and $1,762 million at February 3, 2018 and January 28, 2017, respectively. These purchase obligations are primarily due within three years and recorded as liabilities when inventory is received or services rendered. We issue inventory purchase orders, which represent authorizations to purchase that are cancelable by their tems. We do not consider purchase orders to be firm inventory commitments. If we choose to cancel a purchase order, we may be obligated to reimburse the vendor for unrecoverable outlays incurred prior to cancellation. Real estate obligations, which include commitments for the purchase, construction or remodeling of real estate and facilities, were $716 million and $268 milion at February 3,2018 and January 28, 2017, respectively. These real estate obligations are primarily due within one year, a portion of which are recorded as labilities. We issue letters of credit and surety bonds in the ordinary course of business. Trade letters of credit totaled $1,757 million and $1,330 million at February 3, 2018 and January 28, 2017, respectively, a portion of which are reflected in accounts payable. Standby letters of credit and surety bonds, relating primarily to insurance and regulatory requirements, totaled $372 million and $463 million at February 3,2018 and January 28, 2017, respectively
