Bullseye Corporation, headquartered in the United States, operates retail stores that offer clothing, household products, electronic products, sports products, toys, and entertainment products at discount prices. Bullseye differentiates itself from competitors by pushing trend merchandising with more brand name products, by emphasizing customer service, and by providing a comfortable and attractive shopping experience. Bullseye also offers its own credit card to customers. Bullseye increased its number of stores from 1,397 on December 31, 2010, to 1,591 on December 31, 2013. The growth rate in sales of stores open at least two full years was 5.6% for the fiscal year ended December 31, 2011, 4.8% for the fiscal year ended December 31, 2012, and 3.0% for the fiscal year ended December 31, 2013. The financial statements for Bullseye for the fiscal years ended December 31, 2011,2012, and 2013 appear in Exhibit 7.16. presents financial statement ratios for Bullseye for its fiscal years ended December 31, 2011 and 2012.

(income statement), Exhibit 7.17

(balance sheet),and Exhibit 7.18

(statement of cash flows). Exhibit 7.19

a. Compute the amounts of the ratios listed in Exhibit 7.19 for the fiscal year ended
December 31, 2013.
b. What are the likely reasons for the changes in Bullseye’s rate of return on assets during the three-year period? Analyze the financial ratios to the maximum depth possible.
c. What are the likely reasons for the changes in Bullseye’s rate of return on equity during the three-year period?
d. How has the short-term liquidity risk of Bullseye changed during the three-year period?
e. How has the long-term liquidity risk of Bullseye changed during the three-yearperiod?

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For the Year Ended December 31 2013 2012 2011 Sales Revenue.. Other Revenues... $61,471 1.918 63,389 $57,878 1,637 59,515 $51,271 1,376 52,647 Total Revenues..AU Less Expenses: 41,895 16,200 39,399 15,022 34,927 13,370 Selling and Administrative . .. 669 597 490 58,764 4,625 1,776 S 2,849 55,018 4,497 1,710 S 2,787 48,787 3,860 1,452 S 2,408 Income Before Income Taxes. Income Tax Expense... December31 2013 2012 2011 2010 ASSETS Cash S 2,450 8,054 6,780 1,622 $ 813 6,194 6,254 1,445 $14,706 22,681 1,212 $38,599 1,648 5,666 5,838 1,253 $14,405 20,501 1,552 $36,458 2,245 5,069 5,384 1,224 $13,922 18,042 1,511 $33,475 Inventories Property, Plant, and Equipment (net). . . Other Noncurrent Assets. 25,908 1,559 $46,373 LIABILITIES AND SHAREHOLDERS EQUITY 6,575 1,362 3,180 $11,117 9,925 1,924 $22,966 S 6,268 1,964 3,097 $11,782 16,939 2,345 $31,066 2,567 S 9,588 10,582 2,083 $22,253 5,779 504 1,937 8,220 10,216 2,010 $20,446 Total Currentaiies Long-Term Debt . . Other Noncurrent Liabilities..*. Total Liabilities. Common Stock ($0.10 par value)... Additional Paid-In Capital..*... Retained Earnings. Accumulated Other Comprehensive Income 2,656 12,761 178 2,387 13,417 243 2,121 12,013 1,810 11,148 Total Shareholders Equity15,307 $1,633 $14,205 $13,029 $33,475 Total Liabilities and Shareholders Equity... $46,373 $38,599 $36,458 For the Year Ended December 31 2013 2012 2011 OPERATIONS $2,787 S 2,408 Additions and Subtractions: Depreciation Expense. Other Addbacks and Subtractions...a... (Increase) Decrease in Accounts Receivable... (Increase) Decrease in Inventories. . . 1,496 296 226 1,659 485 602 (525) 38 (431) (25) 435 530 4,862 1,409 474 (244) (454) (52) 489 421 S 4,451 Increase (Decrease) in Other Current Liabilities 186 INVESTING Acquisitions of Property, Plant, and Equipment$(4,369) (3,928) (3,388) 761 1,826) 765 Cash Flow from Investing. $ (6,195) 4,693 $(4149) FINANCING Increase (Decrease) in Short-Term Borrowing.... Increase in Long-Term Borrowing. Issue of Common Stock...w. S 500 913 231 (527) (1,197) (318) 7,617 1,256 181 (1,155) (901) (380) 210 (1,326) (2,808) Acquisition of Common Stock (442) 5 3,707 (1,004 (899) 1,637 (835 (597) 2,245 S 1,648 Net Change in Cash. .. 813 1,648 $ 813 S 2,450 or Fiscal Year: 2012 2011 6.9% 4.7% 1.5 2.7% 68.1% 26,1% 1.0% 2.9% 9.6 Profit Margin 7.4% 4.8% 2.8% 68.1% 25.9% 1.0% 2.3% 9.8 Interest Expense/Sales. Accounts Receivable Turnover Ratio..PWNW. Inventory Turnover Ratio 2.7 18.7% 2.5 1.3 0.6 6.2 470% 59.5% 25.7% 63.5% 21.5% 2.7 2.6 1.5 Quick Ratio .. Cash Flow from Operations to Current Liabilities Ratio. . Debt-Equity Ratio. Cash Flow from Operations to Total Liabilities Ratio..... Interest Coverage Ratio. 50.0% 61.0% 29.0% 74.5% 20.8% 8.9