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1 SHR CASE STUDY –The following case study has 2 parts (Part A & B). Complete all requires of these 2 parts typed/double-spaced/12-font in 5 pages or less Background Information SHR Corporation (SHR) is a midsize, publicly traded direct marketer and retailer of outdoor sporting goods based in the United States. Its common stock is listed on the New York Stock Exchange under the symbol “SHR.”The company prides itself on selling high-quality outdoor sporting goods at competitive prices and providing outstanding customer service. SHR directly markets its merchandise through two major channels—its catalogs and its website—to customers in the United States and nearly 100 other countries. It currently has retail stores and distribution centers in the United States, Canada, and Europe. SHR Corporation recently purchased MVF Company, a manufacturer of high-quality outdoor sportswear. SHR also purchases merchandise from highly reputable vendors in the United States and several other countries. SHR Corporation has enjoyed several consecutive years of sustained growth as reflected in the selected financial information, expressed in millions of dollars (US), presented below: CASE STUDIES Case Study 1: Auditing Entity-Level Controls 2017 2016 2015 Total Assets $700.5 $546.5 $491.3 Sales Revenue 763.5 665.7 589.8 Operating Income 57.5 45.0 38.9 Net Income 34.3 29.0 26.0 Senior management is continuing its efforts to grow the company, increase its market share, and enhance shareholder value by: ■■■Further expanding its direct sales globally. ■■■Systematically increasing the number of retail stores. ■■■Selectively acquiring other businesses that are aligned with its core competencies. Increasing competition over the past several years has motivated management to continuously pursue new and innovative ways to differentiate SHR’s products, streamline the company’s business processes, and take full advantage of advances in IT. Operating efficiency is a critical component of SHR’s competitive pricing strategy.The risks that concern senior management the most heading into fiscal 2018 include: ■■■The continuing economic uncertainty further decreases discretionary consumer spending, which in turn will adversely affect the company’s sales and profitability. ■■■Mounting competition in the industry may make it increasingly difficult to differentiate the company’s high-quality merchandise at prices consumers are willing to pay.
2 ■■■Deterioration of the company’s brand or its positive image in the marketplace may adversely affect sales and profitability. ■■■Failure to successfully integrate newly acquired businesses may adversely affect the company’s performance.