Lets think about Dicks Sporting Goods (Dicks) again. Think about accountants reporting what Dicks has, where Dicks

Question:

Let’s think about Dick’s Sporting Goods (Dick’s) again. Think about accountants reporting what Dick’s has, where Dick’s got its money, and what Dick’s 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 website at www.dickssportinggoods.com. At the bottom of the page, click on “Investor Relations.” The Investor Relations section of Dick’s website contains a lot of information shareholders (also called stockholders) want and need. Next, click on “Financial Information,” and then click on “Annual Reports & Proxy.” Finally, click on “2016 Annual Report.” Dick’s financial statements contain a lot of information. The financial statements are a part of the annual report. Look at Dick’s 2016 financial statements contained in its 2016 annual report (for the year ended January 28, 2017). On page 40, you’ll find Dick’s income statement for the year ending January 28, 2017 (called the Consolidated Statements of Income). On page 42, you’ll find Dick’s balance sheet as of January 28, 2017 On page 43, you’ll find Dick’s statement of retained earnings for the year ending January 28, 2017. It’s a part of Dick’s statement titled Consolidated Statements of Changes in Stockholders’ Equity. Look at the 2016 income statement (for the year ended January 28, 2017) and balance sheet (January 28, 2017) of Dick’s and answer the following questions:

1. What would happen to Dick’s balance sheet if it borrowed $50 million in cash from a bank?

2. What would happen to Dick’s balance sheet if it built a new store costing $50 million in cash?

3. What would happen to Dick’s income statement and balance sheet if it had a big sale, increasing net income by $10 million, which all ended up as cash?

4. What would happen to Dick’s income statement and balance sheet if it hired more employees? The salaries of these employees cost Dick’s $1 million, paid in cash. The extra employees did not create any extra net income. (Do not consider taxes in your answer.)

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...

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