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 40, where you will find Dick’s income statement for the year ending January 28, 2017 (called the Consolidated Statement of Income). On page 42, you’ll find Dick’s balance sheet as of January 28, 2017. Now answer the following questions:

1. What makes up Dick’s inventory? See footnote 1 of the financial statements (page 45 in Dick’s 2016 annual report). What inventory method does Dick’s use, for example, FIFO or LIFO?

2. Look at Dick’s balance sheet. How much has Dick’s invested in inventory as of January 28, 2017, and January 30, 2016?

3. Look at Dick’s balance sheet. How much inventory does Dick’s have per store as of January 28, 2017, and January 30, 2016? (Divide the total inventory by the number of stores Dick’s operated in each of these years: 797 in 2016 and 741 in 2015.) 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 28, 2017? 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 28, 2017? What does this tell you?

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