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Figure 1 Harrod's Sporting Goods Income Statement (2001-2003) 2001 2002 2003 $4,269,871 $4,483,360 $5,021,643 2.991.821 2.981434 3.242.120 Sales Cost of goods sold **** ***** Gross Profit ......... Selling and administrative expense ........ 1,278,050 865,450 1,501,926 1,779,100 1,004,846 1.175.100 ********* Operating profit........... Interest expense. Extraordinary loss..... 412,000 115,300 497,080 122,680 604,423 126,241 170,000 ********** Net income before taxes. Taxes .............. 297,100 104,100 374,400 131,300 308,182 107,864 Net income *** $ 193,200 $ 243,100 $ 200,318 Figure 2 Harrod's Sporting Goods Cash.. Marketable securities Accounts receivable... Inventory... Total current assets Net plant and equipment. Total assets... Balance Sheet (2001-2003) 2001 2002 2003 $ 121,328 $ 125,789 $ 99,670 56,142 66,231 144,090 341,525 216,240 398,200 972.456 1.250.110 1.057.008 1,491,451 1,658,370 1,698,968 1.678.749 1.702 280 1.811.142 $3,170,200 $3,360,650 $3,510,110 Liabilities and Stockholders' Equity Accounts payable.. $ 539,788 $ 576,910 $ 601,000 Notes payable. 160.540 180.090 203.070 Total current liabilities.. 700,328 757,000 804,070 Long-term liabilities 1.265,272 1.292.995 1.372.240 Total liabilities 1,965,600 2,049,995 2,176,310 Common stock 367,400 368,000 368,000 Retained earnings 837,200 942,665 965,800 Total Stockholders' equity 1.204.600 1,310,655 1,333,800 Total liabilities and stockholders' equity.. $3.170,200 $3,360,650 $3,510,110 Figure 3 Harrod's Sporting Goods 1. 2. a. b. 3. a. b. 4. 5. 6. Selected Industry Ratios Net income/Sales 4.51% Net income/Total Assets 5.1% Net income/Sales x Sales to Total Assets 4.51 x 1.33 Net income/Stockholder Equity 9.8% Net income to Total Assets/(1-debt/total assets) 5.1%/(1-0.48) -9.8% Sales/Receivables 6.75 x Sale inventory 3.01 x Sales/Fixed Assets 3.20 x Harrods Sporting Goods Required Calculations 1. Compute the profitability ratios for Profit Margin, Return on Assets (Net Income / Assets) and Return on Equity (Net Income/ Total Equity). Also compute the profitability ratios using the DuPont Analysis for Return on Assets and Return on Equity. The profitability ratios should be shown for all three years. Man

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