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Thank you, Mariya. My name is Yvonne Pierce and I will discuss with you today the importance of a financial analysis as well as how CanGo is performing compared with a couple of its major competitors. Slide 1 - Intro A financial analysis provides a clear view of the performance of a business. It helps in comparing present as well as past performance. This tool is used by many stakeholders of a company including managers, investors and creditors. Point 1 We will see CanGo's leverage, or solvency. It has total liabilities of over $94 M as compared to equity of $141 M. Point 2 & 3 Liquidity - We will see how well CanGo can convert its assets into cash to pay its debts. Point 4 Profitability - How well is CanGo making a profit? This is a key factor in determining what dividends to pay. Point 5 Efficiency - How well is CanGo utilizing its assets? Or its liabilities? We will evaluate two ratios that will help you determine this. Slide 2 The debt to equity ratio can show how well CanGo is able to pay its debt. The higher this number is the more at risk CanGo is at becoming insolvent possibly leading to bankruptcy. CanGo has a slightly high debt to equity ratio. Not as high as these two competitors but still higher than an ideal rate of 50%. A low debt to equity ratio shows that a business has financial flexibility. It is able to quickly take advantage of unexpected investment opportunities. Working capital is the difference between the current assets and the current liabilities. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. We see that CanGo is a highly liquid company. This means you have the ability to quickly convert assets into cash to pay debts or expenses that are coming due. Its current ratio is 5.39 which is way above the ideal ratio of 2. This shows that there is at least 5 times the amount of liquidable assets as there is current debt. We see though that CanGo's high amount of working capital could be an indication of inefficient management of its assets. This leads to a low profitability as both the return on assets and the return on sales indicate with such low numbers. The 2.33% return on assets shows that CanGo is only producing $0.023 per $1.00 of assets owned as profit. The low return rate 10.97% on sales indicates that operating costs may be too high. As for CanGo's efficiency in using its assets and liabilities is concerned, CanGo's receivables were only collected (on average) less than 2 times during 2009. This is an indication that customers are not paying often enough. It takes about 233 days to collect on an account. (365/1.56). I would now like to give the floor to Wali who will discuss the competitive analysis. Below are explanations for possible questions. Leverage The debt to equity ratio provides a measure of creditors' protection in the event of insolvency. Other things being equal, the higher the ratio, the higher the risk. The higher the ratio, the greater the creditor claims on assets, so the higher the likelihood an individual creditor would not be paid in full if the company is unable to meet its obligations. Relatedly, a high ratio indicates not only more fixed interest obligations, but probably a higher rate of interest as well because lenders tend to charge higher rates as the Liquidity Care should be taken, however, in assessing liquidity based solely on working capital. Liabilities usually are paid with cash, not other components of working capital. A company could have difficulty paying its liabilities even with a current ratio significantly greater than 1.0. For example, if a significant portion of current assets consisted of inventories, and inventories usually are not converted to cash for several months, there could be a problem in paying accounts payable due in 30 days. On the other hand, a current ratio of less than 1.0 doesn't necessarily mean the company will have difficulty meeting its current obligations. A line of credit, for instance, which the company can use to borrow funds, provides financial flexibility. That also must be considered in assessing Efficiency Monitoring the receivables turnover ratio (and average collection period) over time can provide useful information about a company's future prospects. For example, a decline in the receivables turnover ratio (an increase in the average collection period) could be an indication that sales are declining because of customer dissatisfaction with the company's products. Another possible explanation is that the company has changed its credit policy and is granting extended credit terms in order to maintain customers. Either explanation could signal a future increase in bad debts. Ratio analysis does not explain what is wrong. It does provide information that highlights areas for further investigation. Financial Analysis Leverage = Company debt Working Capital = Amount of capital available to pay bills Liquidity = Paying bills on time Profitability = Amount of capital acquired through profit Efficiency = Utilization of assets and liabilities CanGo Compared to Competitors Position Key Ratios Leverage Debt / Equity 67.3% 310.9% 162.7% Working Capital Current Assets - Current Liability $164.5 ($4.9) $2.43 Liquidity Current Assets / Current Liability 5.36 1.06 1.08 Profitability Return on Assets 2.33% (0.38%) 2.04% Return on Sales 10.97% 0.63% 3.68% Efficiency Net Sales / Gross Receivables CanGo B&N Amazon 1.56 54.49 19.45 Reference: Yahoo! Finance - Business Finance, Stock Market, Quotes, News. (2012). Yahoo! Finance - Business Finance, Stock Market, Quotes, News. Retrieved October 12, 2012, from http://finance.yahoo.com/ Thank you! Any questions