Below Is Financial Information for Two Sporting Goods Retailers Calculate the Following Ratios for All Sports and Extreme Sports

question 58

Essay

Below is financial information for two sporting goods retailers.Extreme Sports Company operates a retail business and franchising business.At the end 2011,Extreme Sports had 263 Company-owned and 120 franchise-operated retail stores.Extreme's stores are located in suburban,strip mall and regional mall locations,the company operates in 32 states.All Sports Corporation sells sporting goods and related products at over 2,500 Company-operated retail stores.
Selected Data for All Sports and Extreme Sports
(amounts in millions)
$\begin{array}{lrr} & \text { All Sports } & \text { Extreme Sports } \\\text { Sales }&\$ 5,320 & \$ 1,344 \\\text { Cost of Goods Sold } & 3,897 & 887\\\text { Interest Expense } &138 & 43 \\\text { Net Income } & 212 & 33\\\text { Average Accounts Receivable } &114 & 18 \\\text { Average Inventory } & 998 & 286 \\\text { Average Fixed Assets } &1,163 &130 \\\text { Average Total Assets } & 2,472 &662\\\text { Average Tax Rate } & 40 \%&40 \%\\\end{array}$


Calculate the following ratios for All Sports and Extreme Sports:
a.Return on assets
b.Profit margin for ROA
c.Assets turnover
d.Accounts receivable turnover
e.Inventory turnover
f.Fixed asset turnover

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Definitions:

Capital Gains Yield

The capital gain on a stock divided by the price at which it was purchased.

Future Earnings

Expected future profits of a company, often used to assess its valuation or the potential return on investment.

Market Value

The current quoted price at which an asset or service can be bought or sold in a public marketplace.

Gordon Model

The Gordon Model, also known as the dividend discount model, is a method to determine the intrinsic value of a stock based on a future series of dividends that grow at a constant rate.