Shoppers Drug Mart Corporation's 2011 financial statements can be found at the end of this volume or

Question:

Shoppers Drug Mart Corporation's 2011 financial statements can be found at the end of this volume or on the company website. The company is the licensor of full-service retail drug stores that sell pharmacy, health, and beauty products.
Instructions
Review the financial statements and notes of Shoppers Drug Mart and answer the following questions.
(a) Prepare a summary analysis of Shoppers Drug Mart's sources and uses of cash at the level of operating, investing, and financing subtotals only, for 2011 and 2010. Based on this, comment on the similarities and differences in the company's needs for cash and how they were met over the past three years.
(b) What method of reporting operating cash flows does Shoppers use in the statement of cash flows? Do you think this approach provides useful information to a potential investor?
(c) Using the information provided in the statement of cash flows, determine the balances of the Trade Receivables, Inventories, and Accounts Payable and Accrued Liabilities that would have been reported on the December 31, 2011 statement of financial position. Compare this with the actual balance at December 31, 2011, provided in the notes and explain any differences.
(d) Explain why interest paid has been deducted and finance expenses have been added on the statement of cash flows. Companies have a choice in classifying interest and finance costs. What choice did Shoppers make with respect to this?
(e) Based only on the information in the Financing Activities section of the statement of cash flows can you tell whether the debt to equity ratio increased or decreased during the years ended December 31, 2011, and 2010? Explain.
(f) Is Shoppers' operating capability expanding or contracting? What type of assets is the company investing in? What is the likely effect of these investments on Shoppers' future operating and financing cash flows?
(g) Comment briefly on the company's solvency and financial flexibility.
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Solvency
Solvency means the ability of a business to fulfill its non-current financial liabilities. Often you have heard that the company X went insolvent, this means that the company X is no longer able to settle its noncurrent financial...
Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-1118300855

10th Canadian Edition Volume 2

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy

Question Posted: