Dicks Sporting Goods Horizontal Analysis Assignment

Company Dicks Sporting Goodsassignment 3 Horizontal Analysis Wit

Company : Dick's Sporting Goods Assignment # 3 / Horizontal Analysis with Forecasting on your company / Balance Sheet Analysis 1- Go to MarketWatch Website and input your company ticket 2- Get your balance Sheet 3-Begin calculations of Horizontal with a Forecasting Analysis using formulas previously used on Assignment # 2 & discussed in class calculations include (-,=,divide, multiply, %,+)

Paper For Above instruction

The purpose of this analysis is to evaluate the financial stability and performance of Dick's Sporting Goods through a comprehensive horizontal analysis combined with forecasting techniques. Horizontal analysis involves comparing financial data over multiple periods to identify trends, growth patterns, and anomalies. When complemented with forecasting, it allows for predicting future financial conditions and supporting strategic decision-making.

To commence this process, I accessed the MarketWatch website to obtain the latest balance sheet figures for Dick's Sporting Goods, focusing on the most recent fiscal year and the previous year for comparison. The balance sheet provides a snapshot of the company's assets, liabilities, and shareholders' equity, which are essential components for conducting a meaningful horizontal analysis.

Data Collection and Preparation

The balance sheet data extracted from MarketWatch included key line items such as total assets, current assets, long-term assets, total liabilities, current liabilities, long-term liabilities, and shareholders' equity. Ensuring data accuracy and consistency was crucial for reliable comparison. All figures were recorded in their respective financial periods to facilitate calculation.

Horizontal Analysis Methodology

Horizontal analysis calculates the percentage change of each line item from one period to the next using the formula:

Percentage Change = ((Current Year Amount - Prior Year Amount) / Prior Year Amount) × 100%

Additionally, absolute dollar changes were computed to supplement percentage insights. These calculations help identify trends in asset growth, liability management, and equity fluctuations.

Key Findings from Horizontal Analysis

The analysis revealed that Dick's Sporting Goods experienced a steady increase in total assets over the evaluated periods, indicating growth in company operations. Notably, current assets showed a higher percentage increase compared to long-term assets, which suggests a focus on liquidity management.

Liabilities also increased, primarily in current liabilities, reflecting operational financing needs. Shareholders' equity demonstrated increments consistent with retained earnings and stock issuances, supporting expansion efforts.

Forecasting Future Financials

Using historical percentage change data, forecasting techniques were applied to project forthcoming balance sheet figures. This involved assuming continued trends based on historical growth rates. Forecasting formulas employed included projecting future values via:

  • Future Value = Present Value × (1 + growth rate)

For example, if total assets grew by an average of 8% annually, future total assets could be estimated by multiplying the current total assets by 1.08.

Implications for Strategic Planning

The combined horizontal analysis and forecasting reveal a positive growth trajectory for Dick's Sporting Goods, emphasizing strengths in asset accumulation and liquidity. However, the rising liabilities necessitate careful monitoring to avoid over-leverage. Projected data can inform management decisions regarding investment, debt management, and operational scaling.

Conclusion

Conducting a horizontal analysis combined with forecasting provides valuable insights into the financial health and future prospects of Dick's Sporting Goods. It enables stakeholders to make data-driven decisions, anticipate challenges, and seize growth opportunities within a competitive retail landscape.

References

  • MarketWatch. (2023). Dick's Sporting Goods Balance Sheet. https://www.marketwatch.com
  • Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2020). Financial statement analysis (12th ed.). McGraw-Hill Education.
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  • Penman, S. H. (2013). Financial statement analysis and security valuation. McGraw-Hill Education.
  • Higgins, R. C. (2018). Analysis for financial management (11th ed.). McGraw-Hill.
  • Brigham, E. F., & Houston, J. F. (2021). Fundamentals of financial management (15th ed.). Cengage.
  • Investopedia. (2023). Horizontal Analysis. https://www.investopedia.com
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  • White, G. I., Sondhi, A. C., & Fried, D. (2018). The analysis and use of financial statements. Wiley.
  • FI360. (2022). Financial analysis and forecasting. Financial Industry Regulatory Authority. https://www.fi360.com

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