Question

i answer most this budget but please complete it with explain the slove .. and analyse it

the last photo is a clear slove

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 2011 $137,634 17% 2014 2013 2012 5344,524 5217599 $191,129 $165,013 16% 20% 5% 6% 1,873 1,78 1,615 191,838 171,562 150,235 129,664 96 5% 2,001 1,391 108,725 41,236 36,356 31.679 27,408 22,516 1,063 (138) 4,487 8,039 1,357 (171) 3,897 6,671 1,383 (185) 3,692 6,295 1,045 (204) 3,138 5.377 803 (1891 2740 4,430 Dollars in thouder b rita) Net sales Net sales increase Domestic comparative store sales increase Other income Cost of sales Operating, selling, and general and administrative expenses Interest Interest expense Interest income Income tax expense Net income Per share of common stock Net income Dividends Finandal Position Current awets, excluding inventory Inventories at LIFO cost Property, plant, and equipment, net Total assets Current liabilities Long-term debe Shareholders' equity Financial Ratios Acid-test ratio Rate of return on total assets Rate of return on shareholders' equity 1.49 0.28 1.41 0.24 1.21 0.20 0.99 0.16 0.10 $16,497 $ 30,463 24,891 51,904 94,685 32,617 22,731 39,337 S 27,878 22,614 48,750 81,527 27.282 21,143 35,102 $ 26,555 $ 24,356 21,442 19,793 40,934 35,969 78,130 70,349 28,949 25.803 17,838 18,712 31,343 25.834 $ 21,132 17,076 25,973 49,996 16,762 12,122 21,112 0.9 13 0.9 10.2% 21.6% 1.0 9.9% 20.1% 10.3% 22.0% 10.7% 22.9% 27.4% 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. Trend analysis for net sales and net income (use 2011 as the base year). b. Profitability analysis. Evaluate the ability to sell inventory (WRS uses the LIFO method). d. Evaluate the ability to pay debts. e. Evaluate the dividends.

Answer 1

Question 1 to 3 are already solved, so we directly come to Q4.

4. Evaluate the ability to pay debts:

	2015	2014	2013	2012	2011
Total assets (a)	$ 94685	$ 83527	$ 78130	$ 70349	$ 49996
Total equity (b)	$ 39337	$ 35102	$ 31343	$ 25834	$ 21112
Total liabilities (c)	$ 94685	$ 83527	$ 78130	$ 70349	$ 49996
Debt ratio (c-b)/(a)	0.58	0.58	0.60	0.63	0.58
Debt to equity ratio (c-b)/(b)	1.41	1.38	1.49	1.72	1.37
Altrrnatively Debt equity ratio (considering only long-term debt) = long-term debt/equity	0.58	0.60	0.57	0.72	0.57
Net income (d)	$ 8039	$ 6671	$ 6295	$ 5377	$ 4430
Income tax expense (e)	$ 4487	$ 3897	$ 3692	$ 3338	$ 2740
Interest expense (f)	$ 1063	$ 1357	$ 1383	$ 1045	$ 803
Total (g) = (d+e+f)	$ 13589	$ 11925	$ 11370	$ 9760	$ 7973
Times-interest-earned ratio (g)/(f)	12.78	8.79	8.22	9.34	9.93
Current ratio (current assets + inventory)/current liabilities	1.70	1.85	1.66	1.71	2.88
Quick ratio = acid test ratio As given in question	0.9	1.0	0.9	0.9	1.3

The company has a debt equity ratio of more than 1 in each year. It is a high levered company. The ability to pay current debts are reflected in current ratio and being more than 1 is a good sign. The liquidity ratio is also close to 1 which means funds can be easily mobilized for short term liabilities and working capital requirements.

5. Evaluate the dividends:

	2015	2014	2013	2012	2011
Annual dividend per share (a)	0.30	0.28	0.24	0.20	0.16
Earnings per share(b)	1.81	1.49	1.41	1.21	0.99
Dividend pay out (a)/(b)x100	16.57%	18.79%	17.02%	16.53%	16.16%

The dividend payout is not too high, which is a good sign as the company is ploughing back profits. This should encourage investors to invest in the firm.

Analysis of 1-3 show there is an increase in net sales, net income and profitability. This shows company's products ate in demand and market size is increasing. The days sale in inventory is on a decreasing trend which shows the company is taking lesser no of days to sell its stock.

As all the financial metrics are showing a positive sign except debt-equity it is safe to invest in the common stock of WRS.