Case I

Harrod's Sporting Goods

Harrod opened their first store in Omaha, Nebraska in 1991. Year 2009 Harrod stores produced $5 million in total sales. Generating a profit of ove4r $200,000. They contributed $2,000 annually to the University of Nebraska athletic program. January of 2010 the bank decided they wanted to charge the Harrod's 21/2 percent points over prime. It was 4.75 percent ath the time Becky visited the bank, the total rate on the loan is 7.25 percent. The Harrod's use to pay 1 percent over prime, and they want to continue this process with the bank.

1.Compute the profitability ratios, including the a and b components (DuPont Methods) of ratios 2 and 3 as shown in the textbook. The profitability ratios should be shown for all three years. Page 60 of textbook.

2. Write a brief one-paragraph description of any trends that appear to have taken place over the three-year time period. Explain what the answer mean.

6. Harrod's has a superior sales to total assets ratio compared to the industry. For 2009, compute ratios 4, 6, and 7 as described in the text on page 63. and compare them to industry data to see why this is so. Write a brief one-paragraph description of the results. Note: for ratio,4, only half the sales are on credit terms.