Analyze the changes in investing activities of Hibbett Sports Inc for the last 3 years using indirect methods.

1. Calculate Hibbett Sports Inc free cash flows (FCF)

2. Discuss the change in cash flows from investing activities

3. What assets did the company buy or sell over the last 3-year period? Indicate whether cash is being used to grow Hibbett Sports.

Provided is the annual report and financial statements.

Ratios Comments Liquidity Ratios Company Competitor Industry Short-Term Debt Paying Ratios - 2019 2020 2021 Working Capital 1.752 0.845 1.054 In 2020 the working capital dropped below one, meaning they Current Ratio 2.123 1.594 1.952 had less than the needed amount to satisfy all current liabilities. Acid Test Ratio 0.505 0.362 1.055 In 2020, the world suffered from the start of a global pandemic causing companies to shut their doors to quarantine temporarily. After reviewing all short-term debt paying ratios, it can be seen that 2020 was a challenge. However, in 2021, Hibbett Sports is increasing its assets to liabilities allowing their working capital to surpass one. The cash ratio is the most unreliable but, as we can see in 2021, the ratio is close to 1, meaning Hibbets can almost pay all liabilities with just their cash alone. Cash Ratio 0.356 0.283 0.929 Long-Term Solvency or Financial Leverage - Times Interested Earned -35.618 -35.618 -174.757 Many accounts have changed significatly throughout the years Fixed Charge Coverage 43 5.829 -0.291 for this financial analysis, but one of the main accounts I noticed Debt Ratio 0.346 0.250 0.234 that stands out was, total stockholders equity. In 2019 the company recorded $336,049.00, $328,983.00 in 2020, and $391,036.00 in 2021. This effected the Debt equity ratio because the formula involves dividing a companies total liabilities by the stockholders equity which made the ratios fluctuate highs and lows like represented. The business decision of Hibbett Sports Inc, when they took out a 50 million credit line was probably the doing of the equity being so low in 2020, but then jumped when they paid it off shortly in 2021. Which could also affect the other part of the formula, total liabilities. Debt: Equity Ratio 0.625 1.340 1.067 Asset Utilization or Turnover Ratios - nventory turnover 2.549 2.818 3.735 Hibbett Sports Inc appears to be in a stable financial condition. Days Sales in Inventory 143.190 129.516 97.724 Over the past three years the company has become less efficient Receivables Turnover 106.513 139.700 119.249 in asset turnover. Meaning that Hibbett Sports Inc. hasn't been Days Sales in Receivables 2.907 2.766 2.620 able to generate new sales revenue as quickly. With the company having a higher investment in inventory, they have less availaible cash. With that said, the company has made huge inmprovements with its inventory investment periods. These ratios conclude that the company is having issues with their asset turnover time and have less revenue coming in and has more money tied up in assets, but however has made good improvements to managing its inventory and accounts recievables and making sure that money is paid to them more quickly resulting in a quicker turn around.Profitability Ratios Net Profit Margin Ratio 0.326 0.324 0.355 Hibbett Sports shows an increase in all profability ratios over the Total Asset Turnover 2.823 3.199 3.495 past three years. The only ratio that had a slight dip in 2020 was Return on Assets 0.077 0.073 0.169 the operating income margin. Hibbetts was lucky to hold steady in 2020 when alot of retail markets saw a decline in profitibilty Operating Income Margin 0.037 0.030 0.069 due to the COVID pandemic. The operating income margin has Sales to Fixed Assets 2.823 3.199 3.495 seen the greatest change over the past three years increasing ROE 3.002 3.600 3.631 50% from 3% to 6.9%. Hibbets should continue to control their Return on Common Equity 0.058 0.055 0.142 operating expenses and save where they can in order to continue to raise the operating income margin. Also, in order to continue to raise profit margins Hibbetts should look to cost saving measures. When the cost of materials or bulk goods is lower the profits will be higher for Hibbetts. Furthermore, as the economy bounces back from the 2022 pandemic companies will see a higer margin of profits. Gross Profit Margin 0.326 0.324 0.355 Investor Ratios Degree of Financial Leverage NA NA NA Earnings per Share 0.978 1. 166 1.290 Investors can see throughout the years, most of the ratios are Diluted Earnings per Share 0.085 0.083 0.190 gradually increasing. Price/Earnings Ratio 0.025 0.025 0.0008 Based on EPS ratio, the company's shows strong ability and strength to generate profit as it Percentage of Earnings Retained 67.85% 67.14% 68.11 has gone up .312 in the course of three years. The reason for this Dividend Payout 0.321 0.329 0.319 is because the gross profit increased and stockholder's equity did Dividend Yield 0.485 0.500 1.390 as well over the period. As a company is doing well, and gaining more time doing well, these accounts will grow and part of that is Hibbett Sports business decisions. One being they took out a debt of 50 million so they could get back on their feet during the pandemic and paid it off in less than a year quickly. This is a good indication of the company's performance and the higher the EPS is, the better the company's performance to the investors.Income Statement Hibbett Sports, Inc. All numbers in thousands Revenue 2018 2019 2020 2021 Total Revenue 968.219 1,008,682 1,184.234 1,419,657 Cost of Revenue 655,502 679,947 800,783 915,169 Gross Profit 312,717 328,735 383,451 504,488 Operating Expenses Research Development Selling General and Administrative 231,832 264,142 318,011 356,856 Non Recurring 19.661 Others 24207 27052 29323 29583 Total Operating Expenses 256.039 291.194 347.334 406.10 Operating Income or Loss 56,678 37,541 36,117 98.388 Income from Continuing Operations Total Other Income Expenses Net Earnings Before Interest and Taxes Interest Expense (270.00) (714.00) (1,014.00) (563.00) Income Before Tax 39.00 731.00 1,224.00 127.00 Income Tax Expense Minority Interest Net Income From Continuing Ops 231.00) 17.00 210.00 (436.00) Nonrecurring Events Discontinued Operations Extraordinary Items Effect of Accounting Changes Other Items 21417 9137 8984 23686 Net Income 21417 9137 8984 23686 Net Income 35.030 28,421 27.343 74.26 Preferred Stock and Other Adjustments 1.72 1.52 1.54 4.36 Net Income Applicable to Common 20.450 18,826 17,957 17,037 SharesBalance Sheet All mun n thousands Period Ending 2018 2019 2020 2021 Current Assets Cash and Cash Equivalents 73,544 61,756 66,078 209,290 Short-Term Investments Net Receivable: 6.599 9.470 8,477 11,905 Inventory 253,201 280.287 288,011 202,038 Other Current Assets 13430 16343 9946 16567 Total Current Assets 346,774 367.856 372,512 439,800 Long Term Investments Property Plant and Equipment 109.698 115.394 100,956 107,159 Goodwill 23133 19661 Intangible Acgets 32400 32400 23500 Operating right-of-use assets 229155 216224 Finance right-of-use assets 2250 3285 Accumulated Amortization Other Assets 3,198 5.004 3.829 3,573 2,176 2.278 8,996 14,625 Total Assets 461,846 546.065 769,759 808,166 Current Liabilities Accounts Payable 93.435 107.315 131,662 107,215 Short Current Long-Term Debt 16996 55784 82065 89517 Other Current Liabilities 5136 10174 19934 28528 Total Current Liabilities 115,567 173,273 233,661 225,320 Long-Term Debt 2.522 1.994 192,403 188,732 Other Liabilities 2,576 13.826 13,757 2,353 Deferred Long-term Liability 20,291 19.522 Minority Interest 1,294 1.401 955 725 Negative Goodwill Total Liabilities 142.250 210,016 440,776 417,130 Stockholders' Equity Misc. Stocks Options Warrants Redeemable Preferred Stock Preferred Stock Common Stock 389 390 391 394 Retained Earnings 731,901 759.677 784.942 258,951 Treasury Stock (593,230.00) (609,770.00) (645,229.00) (662,843.00) Capital Surplus 180,536 185,752 188,879 194 534 Other Stockholder Equity Total Stockholder Equity 319.596 336.049 328.983 391,036 Net Tangible Assets 319,596 303,649 296,583 367,536