Access the annual report of Canadian Tire Corporation for the year ended December 31, 2011, from the company's website or SEDAR (www.sedar.com). According to the annual report, the company operates more than 488 retail stores across Canada, selling automotive parts, accessories, and services; sports and leisure products; and home products.
Instructions
(a) Read the Management Discussion and Analysis portion of the annual report.
(b) Identify and summarize the various business and financial risks that the company is exposed to. Explain how these risks stem from the underlying nature of the business (that is, the business model).
(c) How is the company dealing with its foreign currency and interest rate risks?
(d) What derivatives are used by the company? What does the company use hedge accounting for?
(e) From Note 39, determine the fair values of the derivatives at the year end. In determining the fair value of these derivatives, what fair value hierarchy has been used? Prepare a schedule outlining the fair value of the cash flow hedges, the fair value hedges, and those derivatives not designated as hedges for accounting purposes.