Dicks Sporting Goods Inc's Profit Margin - Essay Example

Summary

The paper "Dicks Sporting Goods Inc's Profit Margin" explains that a company needs to have a trailing one year after-tax 7% profit margin. Companies that pass the criterion have greater returns for the shareholders. A true test of the company’s quality is that it can sustain that margin…

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Subject: Business
Type: Essay
Level: Undergraduate
Pages: 1 (250 words)
Downloads: 2
Author: tmiller

Extract of sample "Dicks Sporting Goods Inc's Profit Margin"

According to the data, Dicks Sporting Goods Inc. the company recorded a revenue of 1173.794 Million dollars based on the one-year sales. The figure is too high and therefore, the company failed in the analysis test. The twelve-month Debt/Capitalization ratio for the company is quite high from what the methodology requires of the company to go public. The leading companies that investors look for do not need money in order to be a going concern.

The company has really borrowed a lot of money which is not a good sign for the investors. Dicks Sporting Goods Inc. has a 1.84X as debt/EBITDA ratio. This is a relatively higher figure. It, therefore, means that the company will not be in a position to service its current debt in the right manner and can lead to a lower credit rating. According to the analysis, the company has a weak relative strength. Companies that have a relative strength of more than 90% are always considered to be very attractive. Therefore, the relative strength of 64% is not good enough for the investors to buy its shares.

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