In the “All About You” feature, we learned about investing in shares of a company. You have recently inherited $10,000 and you are considering investing in Canadian Tire Corporation, Limited’s common shares and you want to learn more about the company. You get a copy of the company’s 2011 annual report. In it, you see that Canadian Tire has four main business lines: Canadian Tire retail (its retail stores and gas bars), Financial Services (which offers its branded credit cards), Mark’s (the clothing chain), and FGL Sports (which sells sporting goods through stores such as Sport Chek and Sports Experts).

Instructions

(a) How might information on Canadian Tire Corporation’s four main business lines help you with your decision in whether to buy shares in the company?

(b) The company declared cash dividends per share of $1.125 in 2011 and $0.905 in 2010. How might this information be helpful with your investment decision?

(c) Canadian Tire’s basic earnings per share at December 31, 2011, was $5.73. Its share price was $65.90 on December 30, 2011. Calculate Canadian Tire’s price-earnings ratio at December 31, 2011. Can you compare Canadian Tire’s PE ratio with that of similar Canadian companies you might want to invest in? Explain your answer.