Provide an overall understanding of the financial health of Arctic Cat

Discussion of the ratio analysis results, including rationale for the ratios chosen.

Discussion of all horizontal and vertical analysis.

Arctic Cat, Inc. Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands Net sales Cost of goods sold Gross profit Operating expenses Selling and marketing Research and development General and administrative Total operating expenses Operating profit (loss) Other income (expense) Interest income Interest expense Total other expense Earnings (loss) before income taxes Income tax expense (benefit) Net earnings (loss) Net earnings (loss) per share Basic Diluted Weighted average shares outstanding Basic Diluted 12 Months Ended Mar. 31, 2016 Mar. 31, 2015 Mar. 31, 2014 $ 632,895 $ 698,756 $ 730,491 542,228 579,307 579,412 90,667 119,449 151,079 43,714 27,162 36,005 106,881 (16,214) $ 15 (848) (833) (17,047) (7,860) (9,187) $ 39,656 24,341 48,914 112,911 6,538 25 (353) (328) 6,210 1,290 4,920 $ 38,028 23,998 28,557 90,583 60,496 30 (122) (92) 60,404 21,000 39,404 ($0.71) ($0.71) $0.38 $0.38 $2.97 $2.90 12,995 12,995 12,926 13,089 13,275 13,598 References Form 10-K (2016) Retrieved from: https://www.sec.gov/Archives/edgar/data/719866/000119312516606469/d140301d1 19312516606469/d140301d10k.htm Arctic Cat, Inc. Consolidated Balance Sheets - USD ($) $ in Thousands Mar. 31, 2016 Mar. 31, 2015 Current assets Cash and cash equivalents $ 17,730 $ 40,253 Short-term investments 1,009 Accounts receivable, less allowances 35,760 25,067 Inventories 140,007 152,443 Prepaid expenses 6,456 5,363 Income taxes receivable 11,765 5,151 Deferred income taxes 17,229 13,050 Other current assets 100 3,628 Total current assets 229,047 245,964 Property and equipment Machinery, equipment and tooling 214,372 194,074 Land, buildings and improvements 33,259 30,004 Property, Plant and Equipment, Gross, Total 247,631 224,078 Less accumulated depreciation 166,144 161,210 Property, Plant and Equipment, Net, Total 81,487 62,868 Goodwill 3,342 3,342 Intangible assets, net 2,855 3,237 Other assets 1,163 Assets, Total $ 317,894 $ 315,411 Current liabilities Accounts payable 72,012 70,257 Accrued expenses: Marketing 9,087 14,495 Compensation 5,634 4,429 Warranties 24,809 23,062 Insurance 3,538 4,383 Other 8,950 5,463 Total current liabilities 124,030 122,089 Deferred income taxes 13,193 9,716 Other liabilities 13,280 3,234 Commitments and contingencies Shareholders' equity Preferred stock Common stock, par value $.01; 37,440,000 shares authorized 130 130 Additional paid-in-capital 6,105 1,940 Accumulated other comprehensive loss (10,184) (7,142) Retained earnings 171,340 185,444 Total shareholders' equity 167,391 180,372 Liabilities and Equity, Total $ 317,894 $ 315,411 References Form 10-K (2016) Retrieved from: https://www.sec.gov/Archives/edgar/data/719866/000119312516606469/d14030 Mar. 31, 2014 $ $ 22,524 60,008 42,003 140,652 3,815 1,323 14,971 285,296 181,028 29,758 210,786 154,855 55,931 1,067 342,294 93,882 11,671 9,338 19,357 7,026 7,267 148,541 8,710,000 - 129 $ (2,110) 187,024 185,043 342,294 9866/000119312516606469/d140301d10k.htm Arctic Cat, Inc. Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands Net sales Cost of goods sold Gross profit Operating expenses Selling and marketing Research and development General and administrative Total operating expenses Operating profit (loss) Other income (expense) Interest income Interest expense Total other expense Earnings (loss) before income taxes Income tax expense (benefit) Net earnings (loss) 12 Months Ended Mar. 31, 2016 Mar. 31, 2015 100.00% 100.00% 85.67% 82.91% 14.33% 17.09% 0.00% 0.00% 6.91% 5.68% 4.29% 3.48% 5.69% 7.00% 16.89% 16.16% -2.56% 0.94% 0.00% 0.00% 0.00% 0.00% -0.13% -0.05% -0.13% -0.05% -2.69% 0.89% -1.24% 0.18% -1.45% 0.70% Arctic Cat, Inc. Consolidated Balance Sheets - USD ($) $ in Thousands Mar. 31, 2016 Mar. 31, 2015 Current assets Cash and cash equivalents 5.58% 12.76% Short-term investments 0.00% 0.32% Accounts receivable, less allowances 11.25% 7.95% Inventories 44.04% 48.33% Prepaid expenses 2.03% 1.70% Income taxes receivable 3.70% 1.63% Deferred income taxes 5.42% 4.14% Other current assets 0.03% 1.15% Total current assets 72.05% 77.98% Property and equipment Machinery, equipment and tooling 67.44% 61.53% Land, buildings and improvements 10.46% 9.51% Property, Plant and Equipment, Gross, Total 77.90% 71.04% Less accumulated depreciation 52.26% 51.11% Property, Plant and Equipment, Net, Total 25.63% 19.93% Goodwill 1.05% 1.06% Intangible assets, net 0.90% 1.03% Other assets 0.37% 0.00% Assets, Total 100.00% 100.00% Current liabilities Accounts payable 22.65% 22.27% Accrued expenses: Marketing 2.86% 4.60% Compensation 1.77% 1.40% Warranties 7.80% 7.31% Insurance 1.11% 1.39% Other 2.82% 1.73% Total current liabilities 39.02% 38.71% Deferred income taxes 4.15% 3.08% Other liabilities 4.18% 1.03% Commitments and contingencies Shareholders' equity Preferred stock Common stock, par value $.01; 37,440,000 shares authorized 0.04% 0.04% Additional paid-in-capital 1.92% 0.62% Accumulated other comprehensive loss -3.20% -2.26% Retained earnings 53.90% 58.79% Total shareholders' equity 52.66% 57.19% Liabilities and Equity, Total 100.00% 100.00% Arctic Cat, Inc. Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands Net sales Cost of goods sold Gross profit Operating expenses Selling and marketing Research and development General and administrative Total operating expenses Operating profit (loss) Other income (expense) Interest income Interest expense Total other expense Earnings (loss) before income taxes Income tax expense (benefit) Net earnings (loss) 12 Months Ended Mar. 31, 2016 Mar. 31, 2015 -9.43% -4.34% -6.40% -0.02% -24.10% -20.94% 10.23% 11.59% -26.39% -5.34% -348.00% 4.28% 1.43% 71.29% 24.65% -89.19% -40.00% 140.23% 153.96% -374.51% -709.30% -286.73% -16.67% 189.34% 256.52% -89.72% -93.86% -87.51% Arctic Cat, Inc. Consolidated Balance Sheets - USD ($) $ in Thousands Mar. 31, 2016 Mar. 31, 2015 Current assets Cash and cash equivalents -55.95% 78.71% Short-term investments -100.00% -98.32% Accounts receivable, less allowances 42.66% -40.32% Inventories -8.16% 8.38% Prepaid expenses 20.38% 40.58% Income taxes receivable 128.40% 289.34% Deferred income taxes 32.02% -12.83% Other current assets -97.24% 0.00% Total current assets -6.88% -13.79% Property and equipment Machinery, equipment and tooling 10.46% 7.21% Land, buildings and improvements 10.85% 0.83% Property, Plant and Equipment, Gross, Total 10.51% 6.31% Less accumulated depreciation 3.06% 4.10% Property, Plant and Equipment, Net, Total 29.62% 12.40% Goodwill 0.00% 213.21% Intangible assets, net -11.80% 0.00% Other assets 0.00% 0.00% Assets, Total 0.79% -7.85% Current liabilities Accounts payable 2.50% -25.16% Accrued expenses: Marketing -37.31% 24.20% Compensation 27.21% -52.57% Warranties 7.58% 19.14% Insurance -19.28% -37.62% Other 63.83% -24.82% Total current liabilities 1.59% -17.81% Deferred income taxes 35.79% -99.89% Other liabilities 310.64% 0.00% Commitments and contingencies Shareholders' equity Preferred stock Common stock, par value $.01; 37,440,000 shares authorized 0.00% 0.78% Additional paid-in-capital 214.69% 0.00% Accumulated other comprehensive loss 42.59% 238.48% Retained earnings -7.61% -0.84% Total shareholders' equity -7.20% -2.52% Liabilities and Equity, Total 0.79% -7.85% Arctic Cat, Inc. Ratio Analysis Name of Ratio Formula Liquidity Ratios Current Ratio Current Assets/Current Liabilities Quick Ratio Quick Assets/Quick Liabilities Profitability Ratios Gross Margin Gross Profit/Net Sales Operating Margin Operating Margin/Net Sales Profit Margin Net Income/Net Sales Return on Assets Net Income/Average Total Assets Asset Management Total Assets Turnover Net Sales/Average Total Assets Accounts Receivable Turnover Net Credit Sales/Average Accounts Receivable References Form 10-K (2016) Retrieved from: https://www.sec.gov/Archives/edgar/data/719866/000119312516606469/d14 2016 2015 1.85 2.01 0.72 0.77 14.33% 17.09% -2.56% 0.94% -1.45% 0.70% -2.90% 1.50% 2.00 2.12 20.81 20.84 66/000119312516606469/d140301d10k.htm $ thousand Working Capital Total Assets Retained Earnings EBIT Market Value of Equity Total Liabilities Sales Altman Z-score = 1.2A+1.4B+3.3C+0.6D+1.0E Where, A = Working Capital/Total Assets B = Retained Earnings/Total Assets C = Earnings Before Interes and Tax/Total Assets D= Market Value of Equity/Total Liabilities E = Sales/Total assets Altman Z-score Arctic Cat, Inc. 2016 $ 105,017 317,894 171,340 (17,895) 241,208 150,503 632,895 Arctic Cat, Inc. Weight by Coefficients 0.33 1.2 0.54 1.4 -0.06 3.3 1.60 0.6 1.99 1.0 Altman Z-score measures the likeliness of a corporation to get bankrupt. It takes uses five ratios and different weights are given to each ratio. If the score is less than 1.8, it indicates more likelihood of the company to get bankrupt and a score of more than 3 indicates a good financial position of the company. A company with good financial position has a high creditworthiness. The Altman Z-Score of Arctic Cat, Inc. is significantly higher at 3.92 which indicates that the company has low chances of getting bankrupt and has a high creditworthiness. References Form 10-K (2016) Retrieved from: https://www.sec.gov/Archives/edgar/data/719866/000119312516606469/d140301 Calculation of Market Value of Arctic Cat, Inc. No. of Stocks outstaning Market Price on December 31, 2016 $ Market Value $ c Cat, Inc. Altman's Z Score 0.396 0.75 -0.19 0.96 1.99 3.92 1.8, it indicates dicates a good ates that the 9866/000119312516606469/d140301d10k.htm 13,038,249 18.50 (Source: https://finance.yahoo.com/quote/ACAT/) 241,207.61 m/quote/ACAT/)