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For the Dollarama Inc. Consolidated financial statements (Appendix A in the financial statements), prepare 1 Excel document and answer the following questions. This is an individual assignment and you should complete your own work (any cheating will be subject to VCC's policy on academic integrity). Submit your responses in Word or Excel in Moodle. This assignment will be marked out of 20 points as part of your overall marked question score. 1. Was the audit report clean, or qualified? 2. Read the accounting policies. What accounting policy does the company follow for the following types of balance sheet accounts? - Inventory - Property, plant and equipment 3. What is the share capital structure (e.g. common shares, preferred shares, how many classes, how many authorized, how many issued etc.) 4. Prepare a vertical analysis on the two years of financial statements. 9:22 il Horizontal Analysis Study of percentage changes from year-to-year Two steps: - 1. Compute dollar amount of change - 2. Divide dollar amount of change by base-period amount Copyright 2001 Gradac Horizontal Analysis - Example Empire Company Limited Comparative Income Statements For the Years Ended May 5, 2015 and May 6, 2017 2018 2017 $ Change % Change Sales $24.214.6 $23.806.2 1.7% $400.4 STEP 1 Compute the dollar amount of change in sales from 2017 to 2018 2018 - 2017 Increase $24.215 - $23,806 = 5409 Horizontal Analysis - Example Empire Company Limited Comparative Income Statements For the Years Ended May 5, 2018 and May 6, 2017 2018 2017 s Change 5. Change Sales $24.215 $23,806 $409 1.7% STEP 2 Divide the dollar amount of change by the base-period amount. This moodle.vcc.ca 9:22 al Horizontal Analysis - Example 2017 Empire Company Limited Comparative Income Statements For the Years Ended May 5, 2018 and May 6, 2017 2018 $ Change * Change Sales $24. 215 $23.806 $409 1.7% STEP 2 Divide the dollar amount of change by the base period amount. This computes the percentage change for the period Percentage change = Dollar amount of change 100 Base-year amount = $409 x 100 = 0.0172 = 1.7% $23.806 2011 Pse Trend Percentages Form of horizontal analysis Base year selected and set equal to 100% - Amount of each following year stated as a percent of base Trend % - Any year Base year Trend Percentages Trend percentages are computed by selecting a base year whose amount is set equal to 100% Trend % = Any year $ + Base years 2018 2017 2016 2015 2014 5346.5 5333 52.418.5) 5743.6 53285 Operating income moodle.vcc.ca 9:22 il Trend Percentages Trend percentages are computed by selecting a base year whose amount is set equal to 100% Trend % = Any year $ + Base years 2018 2017 2016 2015 2014 Operating income $346.5 $333 ($2,418.5) $7438 53985 105% 101% (736% 2265 100% 2014 is the base your Deva Vertical Analysis Shows relationship of a financial-statement item to its base - For Income Statement, total revenue is the base Vertical analysis % Each income statement item Total revenue - For Balance Sheet, total assets is the base Cream Carter Common-Size Statements Report only vertical analysis percents moodle.vcc.ca e T 9:23 . Common-Size Statements Report only vertical analysis percents - No dollar amounts Help in the comparison of different companies - Financial results in terms of a common denominator Con 2001 ani Benchmarking Compares company to a standard set by others Often a key competitor Facilitated by common-size statements Has goal of improvement . compte de cartes Cash-Flow Signs of Healthy Company Operations are major source of cash Investing includes more purchases than sales moodle.vcc.ca 9:23 ul Cash-Flow Signs of Healthy Company Operations are major source of Investing includes more purchases than sales cash Financing not dominated by borrowing Ratio Categories Measuring ability to pay current liabilities Measuring turnover and cash conversion Measuring leverage Measuring profitability Analyzing stock as an investment Ability to Pay Current Liabilities moodle.vcc.ca e T 1 il Ability to Pay Current Liabilities Working capital Current ratio Quick (Acid-test) ratio Create in Measuring Turnover and the Cash Conversion Cycle Inventory turnover Accounts receivable turnover Accounts payable turnover Measuring Leverage: Overall Ability to Pay Debts Debt ratio Times-interest- eared moodle.vcc.ca earned Measuring Profitability Gross profit percentage Operating income percentage Return on sales Asset turnover Return on asset Leverage ratio Retum on equity Eamings per share Analyzing Shares as an Investment Price/Earnings ratio Dividend yield Book value per common share Com moodle.vcc.ca For the Dollarama Inc. Consolidated financial statements (Appendix A in the financial statements), prepare 1 Excel document and answer the following questions. This is an individual assignment and you should complete your own work (any cheating will be subject to VCC's policy on academic integrity). Submit your responses in Word or Excel in Moodle. This assignment will be marked out of 20 points as part of your overall marked question score. 1. Was the audit report clean, or qualified? 2. Read the accounting policies. What accounting policy does the company follow for the following types of balance sheet accounts? - Inventory - Property, plant and equipment 3. What is the share capital structure (e.g. common shares, preferred shares, how many classes, how many authorized, how many issued etc.) 4. Prepare a vertical analysis on the two years of financial statements. 9:22 il Horizontal Analysis Study of percentage changes from year-to-year Two steps: - 1. Compute dollar amount of change - 2. Divide dollar amount of change by base-period amount Copyright 2001 Gradac Horizontal Analysis - Example Empire Company Limited Comparative Income Statements For the Years Ended May 5, 2015 and May 6, 2017 2018 2017 $ Change % Change Sales $24.214.6 $23.806.2 1.7% $400.4 STEP 1 Compute the dollar amount of change in sales from 2017 to 2018 2018 - 2017 Increase $24.215 - $23,806 = 5409 Horizontal Analysis - Example Empire Company Limited Comparative Income Statements For the Years Ended May 5, 2018 and May 6, 2017 2018 2017 s Change 5. Change Sales $24.215 $23,806 $409 1.7% STEP 2 Divide the dollar amount of change by the base-period amount. This moodle.vcc.ca 9:22 al Horizontal Analysis - Example 2017 Empire Company Limited Comparative Income Statements For the Years Ended May 5, 2018 and May 6, 2017 2018 $ Change * Change Sales $24. 215 $23.806 $409 1.7% STEP 2 Divide the dollar amount of change by the base period amount. This computes the percentage change for the period Percentage change = Dollar amount of change 100 Base-year amount = $409 x 100 = 0.0172 = 1.7% $23.806 2011 Pse Trend Percentages Form of horizontal analysis Base year selected and set equal to 100% - Amount of each following year stated as a percent of base Trend % - Any year Base year Trend Percentages Trend percentages are computed by selecting a base year whose amount is set equal to 100% Trend % = Any year $ + Base years 2018 2017 2016 2015 2014 5346.5 5333 52.418.5) 5743.6 53285 Operating income moodle.vcc.ca 9:22 il Trend Percentages Trend percentages are computed by selecting a base year whose amount is set equal to 100% Trend % = Any year $ + Base years 2018 2017 2016 2015 2014 Operating income $346.5 $333 ($2,418.5) $7438 53985 105% 101% (736% 2265 100% 2014 is the base your Deva Vertical Analysis Shows relationship of a financial-statement item to its base - For Income Statement, total revenue is the base Vertical analysis % Each income statement item Total revenue - For Balance Sheet, total assets is the base Cream Carter Common-Size Statements Report only vertical analysis percents moodle.vcc.ca e T 9:23 . Common-Size Statements Report only vertical analysis percents - No dollar amounts Help in the comparison of different companies - Financial results in terms of a common denominator Con 2001 ani Benchmarking Compares company to a standard set by others Often a key competitor Facilitated by common-size statements Has goal of improvement . compte de cartes Cash-Flow Signs of Healthy Company Operations are major source of cash Investing includes more purchases than sales moodle.vcc.ca 9:23 ul Cash-Flow Signs of Healthy Company Operations are major source of Investing includes more purchases than sales cash Financing not dominated by borrowing Ratio Categories Measuring ability to pay current liabilities Measuring turnover and cash conversion Measuring leverage Measuring profitability Analyzing stock as an investment Ability to Pay Current Liabilities moodle.vcc.ca e T 1 il Ability to Pay Current Liabilities Working capital Current ratio Quick (Acid-test) ratio Create in Measuring Turnover and the Cash Conversion Cycle Inventory turnover Accounts receivable turnover Accounts payable turnover Measuring Leverage: Overall Ability to Pay Debts Debt ratio Times-interest- eared moodle.vcc.ca earned Measuring Profitability Gross profit percentage Operating income percentage Return on sales Asset turnover Return on asset Leverage ratio Retum on equity Eamings per share Analyzing Shares as an Investment Price/Earnings ratio Dividend yield Book value per common share Com moodle.vcc.ca
