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XYZ ATHLETIC SUPPLY, INC. Five-Year Financial Summary (Partial; adapted) 2018 2017 2016 2015 2014 2013 (Dollar amounts in thousands except per share data) $ 275,000 $ 22,000 $ 199,000 $ 171,000 $ 131,000 Net Sales Revenue Net Sales Revenue Increase Domestic Comparative Store Sales Increase 24% 12% 16% 31% 17% 6% 5% 8% 10% 2,090 1,780 1,770 1,700 1,310 Other Income-Net 208,725 169,386 154,822 134,235 103,883 Cost of Goods Sold 41,280 36,340 31,670 27,450 22,540 Selling and Administrative Expenses Interest: Interest Expense (1,070) (1,370) (1,330) (1,100) (800) 140 155 150 230 140 Interest Income Income Tax Expense 4,420 3,900 3,610 3,390 2,730 21,735 12,939 9,488 6,755 2,497 Net Income Per Share of Common Stock: 1.10 0.80 0.70 0.50 0.28 Net Income 0.45 0.43 0.39 0.35 0.31 Dividends Financial Position Current Assets, Excluding Merchandise Inventory Merchandise Inventory $ 30,900 $ 27,200 $ 26,800 $ 24,400 $ 21,800 24,700 22,400 21,600 19,300 17,000 $ 16,800 51,600 46,200 40,500 35,000 25,200 Property, Plant, and Equipment, Net Total Assets 107,200 95,800 88,900 78,700 64,000 32,600 27,800 28,800 25,600 17,000 Current Liabilities Long-term Debt Stockholders' Equity Financial Ratios Acid-Test Ratio 23,c00 21,200 16,800 18,600 12,900 51,600 46,800 43,300 35,500 34,100 0.9 1.0 0.9 1.0 1.3 Rate of Return on Total Assets 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%

XYZ ATHLETIC SUPPLY, INC. Five-Year Financial Summary (Partial; adapted) 2018 2017 2016 2015 2014 2013 (Dollar amounts in thousands except per share data) $ 275,000 $ 22,000 $ 199,000 $ 171,000 $ 131,000 Net Sales Revenue Net Sales Revenue Increase Domestic Comparative Store Sales Increase 24% 12% 16% 31% 17% 6% 5% 8% 10% 2,090 1,780 1,770 1,700 1,310 Other Income-Net 208,725 169,386 154,822 134,235 103,883 Cost of Goods Sold 41,280 36,340 31,670 27,450 22,540 Selling and Administrative Expenses Interest: Interest Expense (1,070) (1,370) (1,330) (1,100) (800) 140 155 150 230 140 Interest Income Income Tax Expense 4,420 3,900 3,610 3,390 2,730 21,735 12,939 9,488 6,755 2,497 Net Income Per Share of Common Stock: 1.10 0.80 0.70 0.50 0.28 Net Income 0.45 0.43 0.39 0.35 0.31 Dividends Financial Position Current Assets, Excluding Merchandise Inventory Merchandise Inventory $ 30,900 $ 27,200 $ 26,800 $ 24,400 $ 21,800 24,700 22,400 21,600 19,300 17,000 $ 16,800 51,600 46,200 40,500 35,000 25,200 Property, Plant, and Equipment, Net Total Assets 107,200 95,800 88,900 78,700 64,000 32,600 27,800 28,800 25,600 17,000 Current Liabilities Long-term Debt Stockholders' Equity Financial Ratios Acid-Test Ratio 23,c00 21,200 16,800 18,600 12,900 51,600 46,800 43,300 35,500 34,100 0.9 1.0 0.9 1.0 1.3 Rate of Return on Total Assets 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%

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter9: Metric-analysis Of Financial Statements
Section: Chapter Questions
Problem 9.2.2P
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Completing a comprehensive financial statement analysis

In its annual report, XYZ Athletic Supply, Inc. includes the following five-year financial summary:

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.

  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 XYZ Athletic Supply, Inc.? Fully explain your final decision.
XYZ ATHLETIC SUPPLY, INC. Five-Year Financial Summary (Partial; adapted) 2018 2017 2016 2015 2014 2013 (Dollar amounts in thousands except per share data) $ 275,000 $ 22,000 $ 199,000 $ 171,000 $ 131,000 Net Sales Revenue Net Sales Revenue Increase Domestic Comparative Store Sales Increase 24% 12% 16% 31% 17% 6% 5% 8% 10% 2,090 1,780 1,770 1,700 1,310 Other Income-Net 208,725 169,386 154,822 134,235 103,883 Cost of Goods Sold 41,280 36,340 31,670 27,450 22,540 Selling and Administrative Expenses Interest: Interest Expense (1,070) (1,370) (1,330) (1,100) (800) 140 155 150 230 140 Interest Income Income Tax Expense 4,420 3,900 3,610 3,390 2,730 21,735 12,939 9,488 6,755 2,497 Net Income Per Share of Common Stock: 1.10 0.80 0.70 0.50 0.28 Net Income 0.45 0.43 0.39 0.35 0.31 Dividends Financial Position Current Assets, Excluding Merchandise Inventory Merchandise Inventory $ 30,900 $ 27,200 $ 26,800 $ 24,400 $ 21,800 24,700 22,400 21,600 19,300 17,000 $ 16,800 51,600 46,200 40,500 35,000 25,200 Property, Plant, and Equipment, Net Total Assets 107,200 95,800 88,900 78,700 64,000 32,600 27,800 28,800 25,600 17,000 Current Liabilities Long-term Debt Stockholders' Equity Financial Ratios Acid-Test Ratio 23,c00 21,200 16,800 18,600 12,900 51,600 46,800 43,300 35,500 34,100 0.9 1.0 0.9 1.0 1.3 Rate of Return on Total Assets 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%
Transcribed Image Text:XYZ ATHLETIC SUPPLY, INC. Five-Year Financial Summary (Partial; adapted) 2018 2017 2016 2015 2014 2013 (Dollar amounts in thousands except per share data) $ 275,000 $ 22,000 $ 199,000 $ 171,000 $ 131,000 Net Sales Revenue Net Sales Revenue Increase Domestic Comparative Store Sales Increase 24% 12% 16% 31% 17% 6% 5% 8% 10% 2,090 1,780 1,770 1,700 1,310 Other Income-Net 208,725 169,386 154,822 134,235 103,883 Cost of Goods Sold 41,280 36,340 31,670 27,450 22,540 Selling and Administrative Expenses Interest: Interest Expense (1,070) (1,370) (1,330) (1,100) (800) 140 155 150 230 140 Interest Income Income Tax Expense 4,420 3,900 3,610 3,390 2,730 21,735 12,939 9,488 6,755 2,497 Net Income Per Share of Common Stock: 1.10 0.80 0.70 0.50 0.28 Net Income 0.45 0.43 0.39 0.35 0.31 Dividends Financial Position Current Assets, Excluding Merchandise Inventory Merchandise Inventory $ 30,900 $ 27,200 $ 26,800 $ 24,400 $ 21,800 24,700 22,400 21,600 19,300 17,000 $ 16,800 51,600 46,200 40,500 35,000 25,200 Property, Plant, and Equipment, Net Total Assets 107,200 95,800 88,900 78,700 64,000 32,600 27,800 28,800 25,600 17,000 Current Liabilities Long-term Debt Stockholders' Equity Financial Ratios Acid-Test Ratio 23,c00 21,200 16,800 18,600 12,900 51,600 46,800 43,300 35,500 34,100 0.9 1.0 0.9 1.0 1.3 Rate of Return on Total Assets 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%
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