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please help! In its annual report, WRM Athletic Supply, Inc. includes the following five-year financial summary: (Click the icon to view the financial summary.) Read
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In its annual report, WRM Athletic Supply, Inc. includes the following five-year financial summary: (Click the icon to view the financial summary.) Read the requirements. Requirement 1. Compute the trend analysis for net sales and net income (use 2014 as the base year). (Round to the nearest whole percent.) Trends in net sales and net income are both Requirement 2. Compute the profitability analysis. Begin by selecting the appropriate measurements that should be used to complete a profitability analysis. Select the formula reference in the last column of the table and enter the earnings per share for each year. (Round to the nearest cent, X.XX.) (Click the icon to view the formulas.) Select the formula reference in the last column of the table and enter the earnings per share for each year. (Round to the nearest cent, X.XX.) (Click the icon to view the formulas.) (Click the icon to view the formulas.) percentages to the tenth percent, X.X\%.) (Click the icon to view the formulas.) Formulas Ref. Formula (a.) 365 days Inventory turnover (b.) Annual dividend per share Earnings per share (c.) Annual dividend per share Market price per share (d.) (Cash including cash equivalents + Short-term investments + Net current receivables) Total current liabilities (e.) Cost of goods sold Average merchandise inventory (f.) Current assets - Current liabilities (g.) Gross profit Net sales revenue (h.) Market price per share of common stock Earnings per share (i.) Net credit sales Average net accounts receivables (j.) (Net income + Income tax expense + Interest expense) Interest expense (k.) Net income Net sales (I.) (Net income + Interest expense) Average total assets (m.) (Net income - Preferred dividends) Average common stockholders equity (n.) (Net income - Preferred dividends) Weighted average-number of common shares outstanding (o.) Total current assets Total current liabilities (p.) Total liabilities Total assets (q.) Total liabilities Total equity \begin{tabular}{|c|c|c|c|c|c|c|c|} \hline \multicolumn{8}{|c|}{\begin{tabular}{l} WRM Athletic Supply, Inc. \\ Five-Year Financial Summary (Partial; adapted) \\ \end{tabular}} \\ \hline (Dollar amounts in thousands except per share data) & & 2018 & 2017 & 2016 & 2015 & 2014 & 2013 \\ \hline Net Sales Revenue & $ & 245,000$ & 218,000$ & 199,000 & 165,000$ & 132,000 & \\ \hline Net Sales Revenue Increase & & 12% & 10% & 21% & 25% & 17% & \\ \hline Domestic Comparative Store Sales Increase & & 5% & 7% & 5% & 7% & 9% & \\ \hline Other IncomeNet & & 2,090 & 1,850 & 1,750 & 1,610 & 1,300 & \\ \hline Cost of Goods Sold & & 183,995 & 165,898 & 154,225 & 129,690 & 104,280 & \\ \hline Selling and Administrative Expenses & & 41,270 & 36,340 & 31,610 & 27,490 & 22,510 & \\ \hline \multicolumn{8}{|l|}{ Interest: } \\ \hline Interest Expense & & (1,060) & (1,340) & (1,330) & (1,050) & (810) & \\ \hline Interest Income & & 110 & 175 & 190 & 230 & 135 & \\ \hline Income Tax Expense & & 4,400 & 3,890 & 3,650 & 3,350 & 2,740 & \\ \hline Net Income & & 16,475 & 12,557 & 10,125 & 5,260 & 3,095 & \\ \hline \multicolumn{8}{|l|}{ Per Share of Common Stock: } \\ \hline Net Income & & 1.50 & 1.20 & 1.10 & 0.90 & 0.68 & \\ \hline Dividends & & 0.45 & 0.43 & 0.39 & 0.35 & 0.31 & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|} \hline Financial Position & & & & & & \\ \hline Current Assets, Excluding Merchandise Inventory & 31,100$ & 27,700$ & 26,600$ & 24,300$ & 21,400 & \\ \hline Merchandise Inventory & 24,100 & 22,800 & 22,100 & 20,100 & 18,000$ & 16,500 \\ \hline Property, Plant, and Equipment, Net & 51,100 & 46,100 & 40,800 & 35,800 & 25,200 & \\ \hline Total Assets & 106,300 & 96,600 & 89,500 & 80,200 & 64,600 & \\ \hline Current Liabilities & 33,000 & 27,000 & 28,500 & 25,700 & 17,100 & \\ \hline Long-term Debt & 22,700 & 21,700 & 17,800 & 18,200 & 12,900 & \\ \hline Stockholders' Equity & 50,600 & 47,900 & 43,200 & 36,300 & 34,600 & \\ \hline Financial Ratios & & & & & & \\ \hline Acid-Test Ratio & 0.9 & 1.0 & 0.9 & 0.9 & 1.3 & \\ \hline Rate of Return on Total Assets & 17.3% & 14.9% & 13.5% & 8.7% & 7.7% & \\ \hline Rate of Return on Stockholders' Equity & 33.5% & 27.6% & 25.5% & 14.8% & 14.3% & \\ \hline \end{tabular} Requirements Analyze the company's financial summary for the fiscal years 2014-2018 to decide whether to invest in the common stock of WRM. Include the following sections in your analysis. 1. Trend analysis for net sales revenue and net income (use 2014 as the base year). 2. Profitability analysis. 3. Evaluation of the ability to sell merchandise inventory. 4. Evaluation of the ability to pay debts. 5. Evaluation of dividends. 6. Should you invest in the common stock of WRM Athletic Supply, Inc.? Fully explain your final decisionStep by Step Solution
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