Dick s Sporting Goods Morgan Andrews ACG2021 Sec. 2

Transcription

1 Annual Report Project Dick s Sporting Goods Morgan Andrews ACG2021 Sec. 2

2 Executive Summary After completing my analysis of Dicks Sporting Goods, I was impressed with the company. I believe Dicks Sporting Goods is well managed by seeing the steady growth Dicks has achieved over the last few years. I think when Dick s begins opening more stores on the west coast of the United States, they will grow even more. I think this company will continue to grow and continue to be the top retail sporting goods store Annual Report

3 Introduction The CEO is Edward W. Stack The home office is in Pittsburg, PA Last fiscal year ended Feb. 3, 2007 Dick's Sporting Goods, Inc., a sporting goods retailer, offers sporting goods equipment, apparel, and footwear. The company provides athletic apparel, outerwear, and sportswear in men's, women's, and children's assortments. The main geographical area is the eastern half of the United States.

4 Audit Report Dick s Sporting Goods independent auditors are Emanuel Chirico, Walter Rossi, and Lawrence Schorr They checked all the financial statements and they accurately show the financial position of Dick s Sporting Goods from Jan. 28, 2006 to Feb. 3, Also all the financial statements met the requirements of the accounting principles generally accepted by the United States.

5 Stock Market Information Price of Stock= week trading range Dividends are not issued Information from Feb. 6, 2008 In my opinion, an investor should buy or hold on to this stock. I believe this company s stock will steadily rise and it is a good long term investment.

6 Industry Situation and Company Plans The industry is retail sports wear. Dick s wants to appeal to all types of athletes and outdoor enthusiast. Dick s wants to increase their number of stores to at least 800 over time. They also want to expand across the entire United States.

7 Income Statement The income statement is multistep format Year Gross Profit Income from Operations Net Income , ,749 72, , , ,611 The gross profit, income from operations, and net income all increased from 2005 to These increases are because the number of stores increased from 255 to 294.

8 Balance Sheet Total Assets Liabilities Stockholders Equity ,187, , , ,524, , ,550 All the accounts increased during The total assets increased by $336,476 which was the largest increase of the accounts.

9 Statement of Cash Flows Cash flow from operations was more than net income for the past two years. During 2005, cash flow from operations was 169,530 and net income was 72,980. During 2006, cash flow from operations was 196,216 and net income was 112,611. Dick s is primarily growing through capital expenditures. Dick s primary source of financing comes from stock sales. Cash has increased from 36,564 to 135,942 over the past two years.

10 Accounting Policies Statements of Income include Galyan s Trading Company Cash and cash equivalencies consist of cash on hand and all highly liquid instruments purchased with a maturity of three months Accounts receivable consist mostly of amounts received from vendors Inventories are stated at the lower of weight average cost. Inventory cost consists of the direct cost of merchandise including freight Property and equipment are recorded at cost and include capitalized leases

11 Accounting Policies Topics of the notes to the Financial Statements: Summary of Significant Accounting Policies, Acquisition, Goodwill and Other Intangible Assets, Store and Corporate Office Closings, Property and Equipment, Accrued Expenses, Debt, Operating Leases, Stock-Based Compensation and Employee Stock Plans, Income Taxes, Net Interest Expense, Earning Per Common Share, Investments, Retirement Savings Plan, Commitments and Contingencies, Subsequent Event, and Quarterly Financial Information

12 Financial Analysis: Liquidity Ratios Working Capital $303,769 $142,748 Current Ratio Receivable Turnover Avg. Days Sales Uncollected Inventory Turnover Avg. Days Inventory on Hand

13 Financial Analysis: Profitability Ratios Profit Margin 3.6% 2.8% Asset Turnover Return on Assets 7.4% 6.1% Return on Equity 18.1% 17.6% There was an increase in all categories from the year of 2005 to the year of 2006

14 Financial Analysis: Solvency Ratio Debt to Equity In 2005 and 2006 the investors controlled the company

15 Financial Analysis: Market Price/ earning per share Strength Ratios $2.03 $1.50 Dividend Yield None Given None Given Dicks Sporting Goods increased the price of their stock from the year of 2005 to the year of 2006

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