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EMPIRE COMPANY in the following pages, you will find excerpts from the annual report of Empire Company Limited ( Empire ) for the year ended
EMPIRE COMPANY
in the following pages, you will find excerpts from the annual report of Empire Company Limited Empire for the year ended May including a message from the CEO, financial statements, notes to the financial statements, and management discussion and analysis. If you wish to see the full report, you may find it at wwwsedar.com. You have been asked to provide investment advice to a friend who is interested in purchasing shares of this company. Please answer the following questions to address your friends requirements. NOTE: Where ratio calculations are required, use yearend amounts, rather than averages.
a What business is Empire engaged in What are Empires two reportable business segments?
b Summarize Empires strategy for managing the risk of losing market share to competitors.
c How many nonvoting Class A shares were issued and outstanding on May
d Evaluate the trend in Empires liquidity, using the current ratio.
e Identify the cash flow patterns for and What do these patterns tell us about Empire?
f Evaluate the trend in the companys profitability by calculating the return on equity and return on assets.
g Prepare a common size analysis of the consolidated statement of earnings for and What significant trends do you observe? What reasons have been offered by management to explain the significant difference in profit between and
h Calculate the inventory turnover ratio for and and evaluate the result.
i Summarize Empires accounting policy for inventories, and identify the cost formula that is used.
j Evaluate the trend in Empires solvency, using the debt to equity ratio.
k Calculate the average age percentage of Empires property and equipment for and and evaluate the result.
l Identify three types of intangible assets Empire owns and identify the estimated useful lives of those assets.
m Briefly summarize the Empires revenue recognition policy.
n What is the purpose of Project Sunrise? How much benefit does management expect the company to realize in the fiscal year?
o How much did Empire pay to purchase Farm Boy? How much of this purchase price was financed through the nonrevolving credit facility?
p Evaluate the trend in the priceearnings ratio PE You will need to look up the share price for the last trading day the Friday before the yearend date of each fiscal year, using TMX Money or a similar financial services website. The companys stock trading symbol is EMP.A
q Overall, based on your analysis above, should your friend purchase Empire shares? Explain your reasoning.
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