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Accounting Annual Project- Dicks Sporting Goods

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  • Dick’s Sporting Goods Inc (Dick’s)
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300 Industry Drive RIDC

Park West

Pittsburg, PA 15275

+1-724-3400(phone)

The ticker symbol used by Dick’s Sporting Goods, Inc. is DKS. It is a public company traded in the New York stock Exchange (NYSE)

The company’s website is http://www.dickssportinggoods.com with links to New Releases, Investor Relations, Financial Information, Corporate history/profile, Executives, Products/ services, Employment opportunities.

The company was founded in 1948 by one 18 year old Dick Stack who was a salesman at a small army and navy store in Binghamton, New York. He was given $ 300 by his grandmother and he opened a small bait and tackle shop in Binghamton.

He expanded the company and by 1958 the company had taken shape and that is how Dick’s Sporting Goods, Inc. came to be.

Dick’s Sporting Goods, Inc. is a full line sporting goods retailer that sells a variety of well known sporting goods, equipment, kits and foot ware in a specialty store environment.

Some of the brands that the company sells are among others Nike, North Face Columbia, Adidas, Callaway and Under armour. It also merchandises private label goods which are retailed under names such as Ativa, and Walter Hagen. These two private label-products are exclusively available in its stores

Apart from retailing, Dick’s Sporting Goods, Inc. store also offer after sales services such as golf grip replacement, bicycle repair and maintenance, home delivery and the assembly of fitness equipment.

The top competitors to Dick’s Sporting Goods, Inc. include Foot Locker, Sports Authority, Wall-Mart, Big 5 Sporting Goods Corporation, Hibbet Sports, Inc. Cabela’s. Incorporated, Gander Mountain Company, Sport Chalet, Inc., Win mark Corporation, Zimiez, Inc.

The CEO of Dick’s Sporting Goods, Inc is Edward W. Stack who is also the chairman of the board; he has been an officer of the company since 1984. He is aged 52.

He took over from his father Richard ODicko Stack when he retired from the company. Mr. Stack has been in the company on a full time basis in several positions including President, Store Manager and Merchandise Manager.

He earns a total of $11,145,106 and also has exercisable stock options in which 201,000 have been exercised worth $9,531,420.

William J. Colombo is the President, Chief Operating Officer and Director of the company. He is aged 51.

Mr. Colombo became President and COO in 2002. He served as President of disports.comLLC a subsidiary of Dick’s Sporting Goods, Inc. from late 1998 to 2000.

From 1995 to 1998, he was Chief Operating Officer and an Executive vice President.

Before joining the company he was with J.C Penney Company Inc (a NYSE listed company) from 1977-1988.

He is also a Director of Gibraltar Industries (listed on NASDAQ)

He earns $ 1,865, 259,259 with exercisable options of 300,000 worth $ 13,917,152.

Dick’s Sporting Goods, Inc, top management

Edward W Stack- male- Chairman of board, CEO

William J Colombo –male- President, COO, Director.

Timothy E Kullman- male – CFO, Senior VP

Gwendolyn K Manto- female – Executive vice President, Chief merchandising Officer

Joseph Schmidt- male – Executive VP- operations

Lynch Mathew – male – Senior VP, Chief Information Officer

From the above analysis it is clear that there is only one senior female executive in Dick’s Sporting Goods, Inc. management.

The fiscal year of the company starts from February and ends on January.

The stock movements of the company have been relatively stable as there have been no major changes.

The current price of the company’s stock as at 9.44 am on November 19, 2007 in the NYSE was $ 28.70.

The 52 week high for the company’s stock is $36.78 while the 52 week low is $ 24.00. This data is from http://financegoogle.com/finance?q=DKS.

The current price of $ 28.70 is based on an average volume 1.76 million shares.

The company has not been paying dividends in the recent past. The basic EPS of the company in the year 2006 was $ 2.20 while the diluted EPS for the same period was $2.03.

It is projected that the earnings will grow by 0.06 during the current quarter to October 2007, for the whole year it is projected to be $ 1.25.

The company is audited by Deloitte and Touché LLP, Pittsburgh Pennsylvania.

The opinion issued by the auditors of the company is unqualified. This means that the financial statements represent a true and fair view of the company’s situation and void material misstatements.

The auditors also expressed an unqualified opinion on the effectiveness of the company’s internal controls. This indicates that the auditors believe that the internal controls put in place by the management are working.

The titles of each of the four financial statements in the annual report are;

Consolidated statements for the fiscal years ended February 3, 2007 January 28, 2006 and January 29, 2005.

Consolidated balance sheets as of February 3, 2007 and January 28, 2006. Consolidated statements of changes in stockholders equity for the fiscal years ended February 3, 2007 January 28, 2006 and January 29, 2005.

Consolidated statements of cash flows for the fiscal years ended February 3, 2007, January 28 2006 and January 29 2005.

Summary of significant Accounting policies

Operations

Fiscal year

Principles of consolidation

Use of estimates in the preparation of financial statements

Cash and cash equivalents cash management

Accounts receivable

Inventories

Property and equipment

Goodwill and intangible assets

Investments

Deferred revenue and other liabilities

Self insurance

Pre-opening expenses

Merger, integration and store closing costs.

Earnings per share

Stock- based compensation

Income taxes

Revenue recognition

Advertising costs

Vendor allowances

Fair value of financial instruments

Segment information

Newly issued accounting pronouncements

  1. ii) Acquisition

iii) Goodwill and other intangible assets

  1. iv) Store and corporate office closings
  2. v) Property and equipment
  3. vi) Accrued expenses

vii) Debt

Senior convertible notes

Revolving credit agreement

Other debt

Capital Lease Obligations.

viii) Operating leases

  1. ix) Stock based compensation and Employee stock plans

Stock option plans

Employee stock purchase plan

Common stock class B common stock and preferred stock

  1. x) Income taxes
  2. xi) Interest expenses, net

xii) Earnings per common share

xiii) Investments

xiv) Retirement savings plan

  1. xv) Commitments and contingencies

xvi) Subsequent event

xvii) Quarterly financial information (Unaudited)

The inventories for year ended February 3, 2007 is $ 641,464,000. It is valued at the lower of cost of weighted average cost or market. Inventory costs consist of the direct cost of merchandize including freight.

(a)The percentage of property plant and equipment of total assets.

As at February 3, 2007 =$433,071,000

                                                 $1,524,265,000

                                               =28.41%

  1. b) According to the 2006 statements the composition of PPE was as follows;

                        Building and land                               $31, 820, 00

                        Leasehold improvements                   $ 374,879,000

                        Furniture fixtures ad equipment           $ 330,757,000

            It is evident that leasehold property is the most significant PPE

  1. c) The company has not invested significantly is land and buildings combined =$ 31,820,000 as compared to total assets of $1,187,789,000 in 2006.
  2. d) Buildings and land

                        Leasehold improvements

                         Furniture, fixtures and equipment

                        Vehicles.

PPE is stated at cost and includes capitalized leases. The amortization and depreciation is in straight line basis.

Estimated lives

Buildings                                                       40 years

Leasehold improvements                              10-25 year

Furniture fixtures equipment                         3-7 years

Vehicles                                                         5 years

The nature of the business is included in the letter to shareholders explaining to them what exactly the company does. Any acquisition and disposals should also be included. The strategies that the company uses in order to be competitive are also included.

The risk factors that may greatly affect the company’s profits and operations should be in the letter to the shareholders. Any ongoing or settled legal proceedings that could affect significantly the company also should be included. Any matter to be discussed and voted on by the shareholders and the price of stock (high and lows) should be indicated.

The management discussion and analysis helps the management to explain the various aspects of the company like performance any acquisition and the general operations.

There was improved earning as compared to previous years due to the increase in store sales was mainly due to the improving sales from the apparel children sporting software merchandizing hunting camping and guns. In the financial year 2007, the company is planning to expand by opening 45 new Dick’s stores and 17 new Golf Galaxy store. The financial statements were prepared according to the GAAP of the USA.

2006                                                                           2005

Ratio calculations result calculation result
Price-earnings=mps

Ratio                 Eps

52.10

2.20

=23.64 times 33.645

1.47

22.89 times
Return assets =net income

Total assets

= 122611,000

1524,265,000

=7.39% 72,980,000

1187,787,000

6.14%
Debt to assets=total debt

Ratio                total assets

181,071,000

1524,265,000

=11.88% 181,201,000

1187,787,000

=15.25%
Return on = net income

Equity   shareholders equity

Ratio

896,699,000

3,114,162,000

=28.79% 739,640,000

262498000

=17.59%
Gross margin=gross profit

Ratio                sales

896,699,000

3,114,162,000

=28.79% 737640,000

262,496,7000

28.10%
 Return

on sales

sales    =

net  income before interest

sales

 

 

187,687,000

3,114,162,000

=6.03% 121,634,000

2624,987,000

=4.63%
Inventory      =        sales

Turnover            inventory

3114,162,000

641,464,000

=4.85 times  

2624987,000

535,698,000

=4.9%
Accounts receivable

Turnover ratio

=   net credit sales

average accounts receivable

3114,162,000

39,687,000

78.47 262498,000

29,365,000

89.39
Average number of days to collect accounts receivables =

accounts receivable x number of days

total credit sales

39,687,000 x 365

3,114,162,000

 

4.65 29,365,000 x365

2,624,987,000

4.08
Current Ratio = current assets

Current liabilities

 

869,779,000

564,983,000

1.54 614,017,000

471,269,000

1.30

Comments

All the major ratios like P/E, return on assets, return on equity, gross margin ratio, return on sales and current ratio have increased from the previous financial years’ amounts. This shows improved profitability and management of available resources. Debt to assets ratio has declined from the 2005 figures meaning less financial risk to the company. The inventory turnover ratio decreased indicating that the movement of stock slowed a little bit.

 Reference

McGraw-Hill Higher Education (2007). Fundamental Financial & Management Accounting Concepts retrieved on 22/11/2007 from http://highered.mcgraw-hill.com/sites/0072846003/student_view0/chapter4/

 www.hoovers.com

http://media.corporate-ir.net/media_files/irol/13/132215/DICKSSPORTINGGO10K_032607.pdf

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Accounting Annual Project- Dicks Sporting Goods. (2018, Apr 25). Retrieved from https://phdessay.com/accounting-annual-project-dicks-sporting-goods/

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