Requirements-Analyzing a company for its investment potential In its annual report, WRM Athletic Supply, Inc. includes the following five-year financial summary: 1. Analyze the companys financial summary for the fiscal years 2016-2020 to decide whether to invest in the common stock of WRM. Include the following sections in your analysis, and fully explain your final decision. a. Trend analysis for net sales and net income (use 2016 as the base year). b. Profitability analysis. c. Evaluation of the ability to sell merchandise inventory (WRM uses the LIFO method). d. Evaluation of the ability to pay debts. e. Evaluation of dividends.

WRM ATHLETIC SUPPLY, INC. Five-Year Financial Summary (Partial; adapted)
(Dollar amounts in thousands except per share data)	2020		2019		2018		2017		2016		2015
Net Sales		$290,000		$215,000		$194,000		$165,000		$139,000
Net Sales Increase		35%		11%		18%		19%		17%
Domestic Comparative Store Sales Increase		5%		7%		5%		8%		10%
Other Income--Net		2,050		1,810		1,790		1,660		1,300
Cost of Goods Sold		218,660		163,400		150,350		129,360		110,227
Selling and Administrative Expenses		41,236		36,356		31,679		27,408		22,516
Interest:
Interest Expense		(1,010)		(1,360)		(1,370)		(1,060)		(870)
Interest Income		120		160		165		225		155
Income Tax Expense		4,430		3,830		3,690		3,380		2,760
Net Income		26,834		12,024		8,866		5,677		4,082
Per Share of Common Stock:
Net Income		1.80		1.50		1.40		1.20		0.98
Dividends		0.40		0.38		0.34		0.30		0.26
Financial Position
Current Assets, Excluding Merchandise Inventory		$30,400		$27,500		$26,200		$24,900		$21,700
Merchandise Inventory at LIFO Cost		24,200		22,500		21,400		19,900		17,100	$16,400
Property, Plant, and Equipment, Net		51,100		45,600		40,700		35,200		25,900
Total Assets		105,700		95,600		88,300		80,000		64,700
Current Liabilities		32,200		27,100		28,700		25,800		16,700
Long-term Debt		22,600		21,700		17,100		18,300		12,600
Stockholders Equity		50,900		46,800		42,500		35,900		35,400
Financial Ratios
Acid-Test Ratio		0.9		1.0		0.9		1.0		1.3
Rate of Return on Total Assets		27.7%		14.6%		12.2%		9.3%		8.3%
Rate of Return on Common Stockholders Equity		54.9%		26.9%		22.6%		15.9%		15.4%