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Analyzing a company for Its Investment Potential In its annual report, WRS Athletic Supply, Inc., includes the following five-year financial summary. WRS ATHLETIC SUPPLY, INC. Five-Year Financial Summary (Partial; adapted) 2010 2015 5244,524 2011 5137634 17% 2014 2013 2012 5217799 $191,329 5165,013 16% 20% 6% 5% 1,873 1,787 1,615 171,562 150,255 129,664 9% 2,001 191,838 1.191 108,725 41,236 36,356 31.679 27.408 22,516 1,383 (188) 1,063 (138) 4,487 8,039 1,337 (171) 3,897 6,671 1,045 (204) 3,338 5,377 803 (189) 2,740 4430 3,692 6,295 (Dollar amount in thousands except per share data) Net sales Net sales increase Domestic comparative store sales increase Other income-net Cost of sales Operating, selling, and general and administrative expenses Interest Interest expense Interest income Income tax expense Net income Por share of common stock Net income Dividends Financial Position Current assets, excluding inventory Inventories at LIFO cost Property, plant, and equipment, net Total assets Current liabilities Long-term debe Shareholderseguiry Financial Ratios Acid-test ratio Rate of return on total assets Rate of return on shareholders' equity 1.41 0.99 1.81 0.30 1.49 1 1.21 0.20 024 0.16 $16,497 $ 30,483 24,891 51,904 94,685 32,617 22,731 39,337 $ 27,878 $ 26,555 22,614 21,442 45,750 40,934 83,527 78,130 27,282 28,949 21.143 17,838 3 5,102 31,343 $ 24,356 19,793 35,969 70,349 25,803 18,712 25.834 $ 21,132 17,076 25,973 49,996 16,762 12,122 21,112 0.9 13 09 10.2% 21.6% 1.0 9.9% 20.1% 0.9 10.3% 22.0% 10.7% 22.9% 9.6% 22.4% Requirement 1. Analyze the company's financial summary for the fiscal years 2011-2015 to decide whether to invest in the common stock of WRS. Include the following sections in your analysis, and fully explain your final decision. a. Trend analysis for net sales and net income (use 2011 as the base year). b. Profitability analysis. c. Evaluate the ability to sell inventory (WRS uses the LIFO method). d. Evaluate the ability to pay debts. e. Evaluate the dividends.

I want to solve this question on the attached tables

Answer 1

Requirement 1:
		2015	2014	2013	2012	2011
Total Net Revenues		$     244,524	$ 217,799	$ 191,329	$ 165,013	$ 137,634
Trend Percentages		177.66%	158.25%	139.01%	119.89%	100.00%
Net Earnings		$          8,039	$      6,671	$      6,295	$      5,377	$      4,430
Trend Percentages		181.47%	150.59%	142.10%	121.38%	100%
Comments:	There is a growth in both net revenue as well as the net earnings.
	Also, Net earnings have increased at a higher rate than net revenue
	which shows that productivity of the company is improved over
	the period.
Requirement 2:
		2015	2014	2013	2012	2011
Net Income		$          8,039	$      6,671	$      6,295	$      5,377	$      4,430
Net sales		$     244,524	$ 217,799	$ 191,329	$ 165,013	$ 137,634
Profit Margin Ratio		3.29%	3.06%	3.29%	3.26%	3.22%
Comments:	The profit margin is maintained at a stable rate. However, it reached
	to a lower rate for 2014. Though a growing rate needs to be targeted.
	Stability of margin is also satisfactory.
Requirement 3:
		2015	2014	2013	2012	2011
Net Sales		$     244,524	$ 217,799	$ 191,329	$ 165,013	$ 137,634
Cost of Goods sold		$     191,838	$ 171,562	$ 150,255	$ 129,664	$ 108,725
Gross Profit		$       52,686	$    46,237	$    41,074	$    35,349	$    28,909
Gross Profit Percentage		21.55%	21.23%	21.47%	21.42%	21.00%
Beginning inventory		$       22,614	$    21,442	$    19,793	$    17,076	$    16,497
Ending inventory		$       24,891	$    22,614	$    21,442	$    19,793	$    17,076
Average inventory		$       23,753	$    22,028	$    20,618	$    18,435	$    16,787
Inventory Turnover		8.077	7.788	7.288	7.034	6.477
(Cost of goods sold/average inventory)
Days' Sales in inventory		45.19	46.86	50.08	51.89	56.35
(365/Inventory turnover)
Comments:	The gross profit margin is stable. Inventory turnover is increasing and so is
	the number of Days' sales in inventory.
Requirement 4:
		2015	2014	2013	2012	2011
Total assets		$       94,685	$    83,527	$    78,130	$    70,349	$    49,996
Total Equity		$       39,337	$    35,102	$    31,343	$    25,834	$    21,112
Total Liabilities		$       55,348	$    48,425	$    46,787	$    44,515	$    28,884
(Current liabilities+Long term Liabilities)
Debt Ratio		0.58	0.58	0.60	0.63	0.58
(Total Liabilities/Total Assets)
Debt to Equity Ratio		1.41	1.38	1.49	1.72	1.37
(Total Liabilities/Total Equity)
Net Income		$          8,039	$      6,671	$      6,295	$      5,377	$      4,430
Income Tax expense		$          4,487	$      3,897	$      3,692	$      3,338	$      2,740
Interest Expense		$          1,063	$      1,357	$      1,383	$      1,045	$          803
Total (EBIT)		$       13,589	$    11,925	$    11,370	$      9,760	$      7,973
Times-interest earned ratio		12.78	8.79	8.22	9.34	9.93
(EBIT/Interest Expense)
Current assets (include inventory)		$       55,374	$    50,492	$    47,997	$    44,149	$    38,208
Current liabilities		$       32,617	$    27,282	$    28,949	$    25,803	$    16,762
Quick assets		$       30,483	$    27,878	$    26,555	$    24,356	$    21,132
(current assets excluding inventory)
Current ratio		1.70	1.85	1.66	1.71	2.28
(Current assets/current liabilities)
Quick ratio		0.93	1.02	0.92	0.94	1.26
(Quick assets/current liabilities)
Comments:	Debt ratio is stable. Debt equity ratio is Fluctuating. Times interest earned
	is increasing. Current ratio is fluctuating as well as quick ratio.
Requirement 5:
		2015	2014	2013	2012	2011
Annual Dividend per share		0.30	0.28	0.24	0.20	0.16
Earning per share		1.81	1.49	1.41	1.21	0.99
Dividend payout		16.57%	18.79%	17.02%	16.53%	16.16%
(Dividend per share/earning per share)
Comments:	Earning per share have increase but the dividend payout is steady.