Harrods case study solution

About Your Signature Assignment - Full case study and assignment attached.

Harrod's Sporting Goods Case Study is designed to align with specific program student learning outcome(s) in your program. Program Student Learning Outcomes are broad statements that describe what students should know and be able to do upon completion of their degree. Signature/Benchmark Assignments are graded with a grading guide or an automated rubric that allows the University to collect data that can be aggregated across a location or college/school and used for course/program improvements.

Review the Week 5 Case Study.

Complete the required activities 1 to 8 in Microsoft® Word or Microsoft® Excel®.

Click the Assignment Files tab to submit your assignment.

Required Activities:

1. Calculate the profitability ratios for all three years using the formulas provided in section “A. Profitability Ratios” within Chapter 3: 1. Profit margin 2. Return on assets (a and b) 3. Return on equity ( a and b)

2. Write a one-paragraph description of any trends that appear to have taken place over the three-year time period.

3. Examine the income statement in Figure 1 above. Note that there was an extraordinary loss of $170,000 in 2015. This might have represented uninsured losses from a fire, a lawsuit settlement, etc. It probably does not represent a recurring event or affect the earnings capability of the firm. For that reason, the astute financial analyst might add back in the extraordinary loss to gauge the true operating earnings of the firm. Since it was a tax-deductible item, we must first multiply by (1-tax rate) before adding it back in.* The tax rate was 35 percent for the year.

$170,000 Extraordinary loss _____.65_ (1-tax rate) $110,500 After-tax addition to profits from eliminating the extraordinary loss from net income