Company Background

Carrefour is one of the largest hypermarket and supermarket chains in the world. Majid Al Futtaim launched the brand in the UAE in 1995, which is the exclusive franchisee to operate Carrefour in 38 countries across Middle East, Africa and Asia. Carrefour currently operates 31 hypermarkets, 73 supermarkets and has over 9200 employees.

Carrefours key to success is the hypermarket, the all-in-one shop that sells everything from bananas to baby strollers at discount prices.

The supermarket received a great acceptance by UAE consumers and the company grown rapidly since its inception at an average annual sales growth of 15%.

Carrefour controls 28% of the retail market in the UAE and its strategy is to increase its market share to 35% in three years. Carrefours strategy is to adapt to the cultural importance of shopping malls and create a city within a city by being located inside a mall with entertainment centers, cinemas, food courts and other convenience amenities.

Read the attached mini case of Carrefour company and answer the following questions

1. Suppose that in the next few years Carrefour wants to expand its shops to out of the city locations with access to highways and inexpensive land to construct its stores. Discuss how will you analyze the financial position of the company if you are the financial analyst for Carrefour? Hint: refer to the 4-step process in financial statement analysis and valuation.

Financial Statement Analysis & Valuation 4-Step Process Step 1 - Understanding the Business Environment and Accounting Information Where does the firm operate? Step 2 - Adjusting and Assessing Financial Information and Accounting Information Profitability Analysis Investing Credit Analysis Financing Operations Where is the firm currently? Step 3 - Forecasting Financial Information Where is the firm going? Step 4 - Using Information for Valuation Cost of Capital and Valuation Basics Cash-Flow-Based Valuation Operating-Income-Based Valuation Market-Based Valuation What is the firm worth? Financial Statement Analysis & Valuation 4-Step Process Step 1 - Understanding the Business Environment and Accounting Information Where does the firm operate? Step 2 - Adjusting and Assessing Financial Information and Accounting Information Profitability Analysis Investing Credit Analysis Financing Operations Where is the firm currently? Step 3 - Forecasting Financial Information Where is the firm going? Step 4 - Using Information for Valuation Cost of Capital and Valuation Basics Cash-Flow-Based Valuation Operating-Income-Based Valuation Market-Based Valuation What is the firm worth