Additional information: LFL Group is a Canadian retail conglomerate specializing in major home furnishings, mattresses, appliances...
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Additional information: LFL Group is a Canadian retail conglomerate specializing in major home furnishings, mattresses, appliances and electronics. Selected information from LFL's statements of financial position at December 31, 2021 and 2020 (with comparative amounts for 2019) and condensed statements of earnings for the years 2021 and 2020 are shown below. LFL GROUP Excerpts from Statements of Financial Position at December 31 (in millions of dollars) 2021 2020 2019 Assets Cash and cash equivalents $ 382 $ 369 Short-term investments 108 124 Accounts receivable, net 160 131 $141 Inventories, at cost 396 332 334 Total current assets 1,075 982 Property, plant, and equipment 658 714 721 Total assets 2,453 2,419 2,130 Liabilities Accounts payable 544 305 257 Total current liabilities 1,200 821 Total liabilities 1,662 1,403 Shareholders' Equity 791 1,016 916 LFL GROUP 2021 2020 Cash provided by operating activities Cash provided by (used in) investing activities $314 $511 16 (43) Cash provided by (used in) financing activities Interest paid (316) (189) 20 24 Income taxes paid 55 46 Market price per common share at December 31 25.23 20.63 Required (Round your calculations to three decimal places): 1. Calculate the quick ratio for 2021 and explain its significance in terms of LFL's liquidity position at December 31, 2021. (3 marks) 2. Assume that you are interested in buying common shares in LFL. a. Identify three ratios that would be most useful for your investment decision, and explain why you chose these ratios. (3 marks) b. Calculate the ratios that you identified above for each of the years 2021 and 2020. (6 marks) c. Would you purchase shares in LFL based on the calculated ratios? Explain. (2 marks) Statements of Earnings For the Years Ended Dec. 31, 2021 and Dec. 31, 2020 (in millions of dollars) Revenue Cost of sales Gross profit 2021 $2,513 1.404 1,109 Selling, general and administrative expenses 819 Earnings from operations 290 Finance costs (21) Finance income Earnings before income taxes 277 Income tax expense 69 Net earnings $ 208 Earnings per share $2.67 Additional information: LFL Group is a Canadian retail conglomerate specializing in major home furnishings, mattresses, appliances and electronics. Selected information from LFL's statements of financial position at December 31, 2021 and 2020 (with comparative amounts for 2019) and condensed statements of earnings for the years 2021 and 2020 are shown below. LFL GROUP Excerpts from Statements of Financial Position at December 31 (in millions of dollars) 2021 2020 2019 Assets Cash and cash equivalents $ 382 $ 369 Short-term investments 108 124 Accounts receivable, net 160 131 $141 Inventories, at cost 396 332 334 Total current assets 1,075 982 Property, plant, and equipment 658 714 721 Total assets 2,453 2,419 2,130 Liabilities Accounts payable 544 305 257 Total current liabilities 1,200 821 Total liabilities 1,662 1,403 Shareholders' Equity 791 1,016 916 LFL GROUP 2021 2020 Cash provided by operating activities Cash provided by (used in) investing activities $314 $511 16 (43) Cash provided by (used in) financing activities Interest paid (316) (189) 20 24 Income taxes paid 55 46 Market price per common share at December 31 25.23 20.63 Required (Round your calculations to three decimal places): 1. Calculate the quick ratio for 2021 and explain its significance in terms of LFL's liquidity position at December 31, 2021. (3 marks) 2. Assume that you are interested in buying common shares in LFL. a. Identify three ratios that would be most useful for your investment decision, and explain why you chose these ratios. (3 marks) b. Calculate the ratios that you identified above for each of the years 2021 and 2020. (6 marks) c. Would you purchase shares in LFL based on the calculated ratios? Explain. (2 marks) Statements of Earnings For the Years Ended Dec. 31, 2021 and Dec. 31, 2020 (in millions of dollars) Revenue Cost of sales Gross profit 2021 $2,513 1.404 1,109 Selling, general and administrative expenses 819 Earnings from operations 290 Finance costs (21) Finance income Earnings before income taxes 277 Income tax expense 69 Net earnings $ 208 Earnings per share $2.67
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Related Book For
Financial Accounting
ISBN: 978-1259103285
5th Canadian edition
Authors: Robert Libby, Patricia Libby, Daniel Short, George Kanaan, M
Posted Date:
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