Question

EXHIBIT 5 Fitbit, Inc., Consolidated Statements of Operations, 2014-First Quarter 2017 (in thousands) First Quarter 2017 2016 2015 2014 Revenue $298,942 Cost of revenue 180,643 $2,169,461 1.323,557 845,884 $1,857,998 956,935 901,063 $745,433 387.776 357,657 118,299 Gross profit Operating expenses: Research and development 87,785 320,191 150,035 54,167 Sales and marketing 91,174 332,741 112,005 491,255 146,903 General and administrative 30,746 77,793 33,556 Change in contingent consideration Total operating expenses 209,678 199,728 Operating income 958,349 (112,465) 3,156 (91,379) 1,096 157,929 Interest income (expense), net (2,222) (2704) 552,865 348,198 (1.019) _(59,230) 287,949 112.272 $ 175,677 Other expense, net 533 _(15,934 Income before income taxes (109,295) 139,773 Income tax expense (89,750) _(29.671) $ (60,079) _(6,518) $ (102,777) 7.996 $ 131,777 Net income

Answer 1

a	Fitbit's profitability declined between 2015 and 2016 and early indications from Q1 2017 indicate little progress
	Yes, the statement is correct
	Particulars	Q12017	2016	2015
	Revenue	298942	2169461	1857998
	Net Income	-60079	-102777	175677
	Profitability	-20%	-5%	9%
b	Gross margin for Fitbit dropped 48% in 2015 to 39% in 2016
	Yes, the statement is correct
	Particulars	2016	2015	2014
	Revenue	2169461	1857998	745433
	Cost of revenue	1323557	956935	387776
	Gross profit	845904	901063	357657
	GP Margin	39%	48%	48%
c	Operating return in assets increased from 12% in 2015 to 20% in 2016
	No, the statement is not correct
	Particulars	2016	2015
	Operating Income	-112465	348198
	Total Assets	1820226	1519066
	Operating Return on Assets	-6%	23%
d	Fitbits increasing leverage from 2015 to 2016, as expressed by Debt to Asset and Debt to Equity Ratio appears to be a result of combined effect of decreasing profitability
	NO, The statement is not correct. It is mainly due to increase in Accrued liabilities and other Debt
	Particulars	2016	2015
	Debt	821694	537615
	Equity	998532	981451
	Assets	1820226	1519066
	D/ Eq	0.82	0.55
	Debt / Asset	0.45	0.35
e	The company has a good deal of ground to cover to overcome their lack luster performance
	Yes , the statement is correct as there is significant fall in Revenue growth
	Particulars	Q12017	2016	2015	2014
	Revenue	298942	2169461	1857998	745433
	CAGR %		16.76337	149.2508
f	Fitbit's present working capital will allow the company to invest in future strategic endevours
	NO, The working capital has gone down
			2016	2015
	Current Asset		1480571	1355414
	Current Liab		761932	508257
	Working Capital		718639	847157