Let's look at Dick's Sporting Goods (Dick's) some more. Think about Dick's. Think about accountants reporting what Dick's has, where it got its money, and what it has been doing to create value. Is Dick's earning net income or loss? What resources did Dick's need to operate? Think about the business of Dick's.

Return to Dick's financial statements which are contained in its Annual Report (see the Continuing Financial Statement Analysis Problem in Chapter 2 for instructions on how to access the Annual Report). Go to page 44 where you will find Dick's income statement for the year ending January 31, 2015 (called the Consolidated Statement of Income). On page 46, you'll find Dick's balance sheet as of January 31, 2015. Now answer the following questions:

1. What makes up Dick's inventory? See footnote 1 of the financial statements (page 49 of the financial statements found in Dick's 2014 annual report). What inventory method does Dick's use, such as FIFO or LIFO?

2. Look at Dick's balance sheet. How much has Dick's invested in inventory as of January 31, 2015 and February 1, 2014?

3. Look at Dick's balance sheet. How much inventory does Dick's have per store as of January 31, 2015 and February 1, 2014? (Divide total inventory by the number of stores Dick's operated in each of these years, 694 in 2014 and 642 in 2013.) Is inventory per store increasing or decreasing?

4. Look at Dick's balance sheet and income statement. What is Dick's inventory turnover rate for the year ending January 31, 2015? What does this tell you?

5. Look at Dick's balance sheet and income statement. What is Dick's days-sales-in inventory for the year ending January 31, 2105? What does this tell you?

6. Looking back over your answers to question 1 through 5, how do you think Dick's is performing?