Horngren's Accounting: The Managerial Chapters, Student Value Edition (12th Edition)
12th Edition
ISBN: 9780134491509
Author: MILLER-NOBLES, Tracie L., Mattison, Brenda L., Matsumura, Ella Mae
Publisher: PEARSON
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Textbook Question
Chapter 17, Problem P17.36BPGB
Completing a comprehensive financial statement analysis
Learning Objectives 2, 4
3. 2018: Inventory turnover 8.86
In its annual report, XYZ Athletic Supply, Inc. includes the following five-year financial summary:
| XYZ ATHlETIC SUPPLY. INC. Five-Year Financial Summary (Partial; adapted) |
||||||
| (Dollar amounts in thousands except per share data) | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 |
| Net Sales Revenue | $275,000 | $ 222,000 | $ 199,000 | $171,000 | $131,000 | |
| Net Sales Seles Revenue Increase | 24% | 12% | 16% | 31% | 17% | |
| Domestic Comparative Store Sales increase | 6% | 6$ | 5% | 8% | 10% | |
| Other Income—Net | 2,090 | 1,780 | 1,770 | 1,700 | 1,310 | |
| Cost of Goods Sold | 208,725 | 169,386 | 154,822 | 134,235 | 103,883 | |
| Selling and Administrative Expenses | 41,280 | 36,340 | 31,670 | 27,450 | 22,540 | |
| Interest: | ||||||
| Interest Expense | (1,070) | (1,370) | (1,330) | (1,100) | (800) | |
| Interest income | 140 | 155 | 150 | 230 | 140 | |
| Income Tax Expense | 4,420 | 3,900 | 3,610 | 3,390 | 2,730 | |
| Net Income | 21,735 | 12,939 | 9,488 | 6,755 | 2,497 | |
| Per Share of Common Stock: | ||||||
| Net income | 1.10 | 0.80 | 0.70 | 0.50 | 0.28 | |
| Dividends | 0.45 | 0.43 | 0.39 | 0.35 | 0.31 | |
| Financial Position | ||||||
| Current Assets. Excluding Merchandise Inventory | $30,900 | $ 27,200 | $ 26,800 | $24,400 | $ 21,800 | |
| Merchandise inventory | 24,700 | 22,400 | 21,600 | 19,300 | 17,000 | $16,800 |
| Property, Plant, and Equipment, Net | 51,600 | 46,200 | 40,500 | 35,000 | 25,200 | |
| Total Assets | 107,200 | 95,800 | 88,900 | 78,700 | 64,000 | |
| Current Liabilities | 32,600 | 27,800 | 28,800 | 25,600 | 17,000 | |
| Long-term Debt | 23,000 | 21,200 | 16,800 | 18,600 | 12,900 | |
| 51,600 | 46,800 | 43,300 | 34,500 | 34,100 | ||
| Financial Ratios | ||||||
| Acid-Test Ratio | 0.9 | 1.0 | 0.9 | 1.0 | 1.3 | |
| 22.5% | 15.5% | 12.8% | 10.9% | 9.9% | ||
| Rate of Return on Common Stockholders' Equity | 44.2% | 28.7% | 24.1% | 19.4% | 18.9% | |
Requirements
Analyze the company's financial summary for the fiscal years 2014-2018 to decide whether to invest in the common stock of XYZ. Include the following sections in your analysis.
- Trend analysis for net sales revenue and net income (use 2014 as the base year).
- Profitability analysis.
- Evaluation of the ability to sell merchandise inventory.
- Evaluation of the ability to pay debts.
- Evaluation of dividends.
- Should you invest in the common stock of XYZ Athletic Supply, Inc.? Fully explain your final decision
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Chapter 17 Solutions
Horngren's Accounting: The Managerial Chapters, Student Value Edition (12th Edition)
Ch. 17 - Prob. 1QCCh. 17 - Prob. 2QCCh. 17 - Prob. 3QCCh. 17 - Prob. 4QCCh. 17 - Prob. 5QCCh. 17 - Prob. 6QCCh. 17 - Prob. 7QCCh. 17 - Prob. 8QCCh. 17 - Prob. 9QCCh. 17 - Prob. 10QC
Ch. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - What is benchmarking, and what are the two main...Ch. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - Prob. 10RQCh. 17 - Prob. 11RQCh. 17 - Prob. 12RQCh. 17 - Prob. 13RQCh. 17 - Prob. S17.1SECh. 17 - Prob. S17.2SECh. 17 - Prob. S17.3SECh. 17 - Prob. S17.4SECh. 17 - Prob. S17.5SECh. 17 - Prob. S17.6SECh. 17 - Computing inventory, gross profit, and receivables...Ch. 17 - Prob. S17.8SECh. 17 - Measuring profitability Learning Objective 4...Ch. 17 - Prob. S17.10SECh. 17 - Prob. S17.11SECh. 17 - Prob. S17.12SECh. 17 - Prob. E17.13ECh. 17 - Prob. E17.14ECh. 17 - Prob. E17.15ECh. 17 - Prob. E17.16ECh. 17 - Prob. E17.17ECh. 17 - Prob. E17.18ECh. 17 - Prob. E17.19ECh. 17 - Prob. E17.20ECh. 17 - Prob. E17.21ECh. 17 - Prob. E17.22ECh. 17 - Prob. P17.23APGACh. 17 - Prob. P17.24APGACh. 17 - Prob. P17.25APGACh. 17 - Prob. P17.26APGACh. 17 - Using ratios to evaluate a stock investment...Ch. 17 - Prob. P17.28APGACh. 17 - Prob. P17.29APGACh. 17 - Prob. P17.30BPGBCh. 17 - Prob. P17.31BPGBCh. 17 - Prob. P17.32BPGBCh. 17 - Prob. P17.33BPGBCh. 17 - Prob. P17.34BPGBCh. 17 - Prob. P17.35BPGBCh. 17 - Completing a comprehensive financial statement...Ch. 17 - Prob. P17.37CTCh. 17 - Prob. P17.38CPCh. 17 - Prob. 17.1DCCh. 17 - Prob. 17.1EICh. 17 - Financial Statement Case 17-1 Use Target...
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