Dick's Sporting Goods: Chapter 2. Firm Performance and Competitive Advantage

DSG has done a great job a having a "sustained" competitive advantage. Over the last few years DSG has rose above its competitors into a class of its own. Aside from increasing annualized total return of 55.9%, it has all of the measurables you would look for when it comes to numbers. For the purpose of this blog assignment I will include some percentages that can be seen in Chapter 2 of our textbook using some simple and adjusted accounting measures.

Altman's Z-score ratio: 6.45
P/E ratio: 22
Current Ratio: 1.5
Debt to Equity: 0.01
Inventory Turnover: 3.7
Tobin's Q ratio: 2.51

The z-score ratio is a ratio that will determine the probability that a firm will declare bankruptcy. If the score is less than 1.8, it will fail. If it is between 1.8 and 3.0, it will probably not fail. If it is above 3.0, it will not fail. DSG's score of 6.45 is far above concern and can show a good competitive advantage.

Tobin's q is the ratio of a firm's market value to the replacement cost of its assets. Anything greater than 1.0 is an indicator that a firm is generating superior performance. DSG's is 2.51.

All of the above information can be found below on the links provided and will provide even more evidence why DSG is sustaining a competitive advantage.

http://www.advfn.com/exchanges/NYSE/DKS/financials
http://www.newsmax.com/Companies/Dick-s-Sporting-Goods-DKS/2012/02/29/id/431009