What do the data in case Exhibit 1 reveal about lululemons financial and operating performance?To answer this question, use the key financial ratios in Chapter 4 to assist you in performing calculations to determine which of the following statements are true.

_____From FY 2013 to FY 2014, growth rates in just about all revenue and profitability categories slackened considerably, with the sole exception of cost of goods sold, which grew at 23.6% in FY 2014 vs. 36.9% in FY 2012.

_____Over the FY 2010-FY-2014 period, 4 year CAGRs for total revenues was 36.9% and net income were 48.0 percent, respectively, evidence of extraordinary growth despite the challenges in 2013.

_____Gross margins dropped from 55.7% in FY 2013 to 52.8% in FY 2014, most likely reflecting a markdown of inventories due to the luon garment recall.

_____Net income as a percentage of sales (or return on sales) dropped from 22.8 % in FY 2013 to 15.6% in FY 2014.

_____Return on assets declined from 25.8% in 2013 to 22.4% in 2014.

_____Operating return on assets declined from 35.8% in 2013 to 31.3% in 2014.

_____Return on equity declined from 35.6% in 2013 to 27.5% in 2014.

_____Total asset turnover dropped slightly between FY 2013 to FY 2014, from 1.30x to 1.27x, reflective of declining revenue growth in relation to the number of new outlets opened in the year.

_____Inventory turnover declined slightly from 4.04x in FY 2013 to 3.91x in FY 2014.

_____Same-store sales dropped from $5.83 million in FY 2013 to $5.44 million in FY 2014, and sales per square foot of retail space also dropped from $2,058 to $1,894 over that one-year period.

_____On balance, lululemons business is stagnating, with the financial analysis indicating a serious negative trend.

_____On balance, lululemon is a growing, profitable business one years results do not necessarily indicate an overly negative trend.

_____Free cash flows (net cash provided by operating activities capital expenditures) continue to be robust.

_____Free cash flows appear to sufficient to fund future expansion at an approximate cost of $2.5 million per new store.

_____Lululemon appears to have inadequate debt capacity to aid in future expansion.

n CrattinA ard Executing atraicsy EXHIBIT 1 Financial and operating Highlights, Lululemon Athletica, Fiscal Years 2009-2013 2012 ending 2011 lending 2010 (ending 2013 ending 200 lending Feb. 2, 2014) Jan. 31, 2010 ions, except per share datal E1,5912 ,370A 81.000.8 54829 316 H Gross proft 3elna general, and administrativo 223 operating Net profit 2795 271A 850 5 3 Earnings per share $1.33 $188 $1 $0.86 Balance sheet data Un mil ons0 Cash and cash equ Malente equty Cash flow and other duta in milli Pmvided by operating $180.0 $113.0 Number corporate ownod starea open end pericd Number of tranchisod stores op at end o porod 8ales per goal square foot at corporals owned stores noen al $2058 Avorago salos at co $5,440.000 $5830000 330000 stores open at less t