Part 3: Investment Opportunity

• Your recommendation Your client has $10,000 and wants to invest in only one of the two companies. ASSUME that these companies are private corporations and you dont know the fair market value of each common share. Which one do you recommend? Why? Highlight important ratios you have discussed.

• Include any other financial highlights, ratios (not listed above) and other information, e.g. corporate achievements, market share, growth opportunities, etc. to support your recommendation

Part 2: Financial Status Canadian Tire Corporation 1. Liquidity Ratios (2019) All Values in CAD millions a. Working capital: Current assets- Current Liabilities 9555-5751=$3804 Current Assets 9555 b. Current Ratio= = 1.66:1 Current Liabilities 5751 c. Accounts Receivable Turnover Ratio Net Credit Sales = 2.14 times Average Accounts Receivable 2. Solvency RatiosAll Values in CAD millions a. Debt to Total Assets Ratio ST+LT Debt =2205/19518=0.112 Total Assets 3. Profitability Ratios a. Gross Profit Margin: Revenue - COGS 14534-9899 = 0.318 =31.8% Net Sales 14535 b. Profit Margin: Profit 778 = 0.0535 = 5.35% Net Sales 14534 c. Assets Turnover Net Sales 14535 = 0.79 times Average Total Asset (17287+19518)/2 = 18403 Loblaws Cos. Ltd. 1. Liquidity Ratios (2019) All Values in CAD millions a. Working capital: Current assets- Current Liabilities 11,310 -9,227=$2083 Current Assets 11310 b. Current Ratio= = 1.23 : 1 Current Liabilities 9227 c. Accounts Receivable Turnover Ratio Net Credit Sales =9.99 times Average Accounts Receivable 2. Solvency RatiosAll Values in CAD millions a. Debt to Total Assets Ratio ST+LT Debt 3289/36309 =0.090 Total Assets 3. Profitability Ratios Gross Profit Margin Net Sales COGS 48037-33789 = 0.297 = 29.7% Net Sales 48037 b. Profit Margin Profit 1081 0.0225 = 2.25% Net Sales 48037 c. Assets Turnover Net Sales 48037 = 1.45 times Average Total Asset (30153+36309)/2= 33231 d. Return on Assets Profit 1081 = 0.033 = 3.3% Average Total Asset (30153+36309)/2= 33231 e. Return on Equity Profit 1081 = 0.093 = 9.3% Average Shareholders' Equity (12119+11234)/2= 11677 a. Part 2: Financial Status Canadian Tire Corporation 1. Liquidity Ratios (2019) All Values in CAD millions a. Working capital: Current assets- Current Liabilities 9555-5751=$3804 Current Assets 9555 b. Current Ratio= = 1.66:1 Current Liabilities 5751 c. Accounts Receivable Turnover Ratio Net Credit Sales = 2.14 times Average Accounts Receivable 2. Solvency RatiosAll Values in CAD millions a. Debt to Total Assets Ratio ST+LT Debt =2205/19518=0.112 Total Assets 3. Profitability Ratios a. Gross Profit Margin: Revenue - COGS 14534-9899 = 0.318 =31.8% Net Sales 14535 b. Profit Margin: Profit 778 = 0.0535 = 5.35% Net Sales 14534 c. Assets Turnover Net Sales 14535 = 0.79 times Average Total Asset (17287+19518)/2 = 18403 Loblaws Cos. Ltd. 1. Liquidity Ratios (2019) All Values in CAD millions a. Working capital: Current assets- Current Liabilities 11,310 -9,227=$2083 Current Assets 11310 b. Current Ratio= = 1.23 : 1 Current Liabilities 9227 c. Accounts Receivable Turnover Ratio Net Credit Sales =9.99 times Average Accounts Receivable 2. Solvency RatiosAll Values in CAD millions a. Debt to Total Assets Ratio ST+LT Debt 3289/36309 =0.090 Total Assets 3. Profitability Ratios Gross Profit Margin Net Sales COGS 48037-33789 = 0.297 = 29.7% Net Sales 48037 b. Profit Margin Profit 1081 0.0225 = 2.25% Net Sales 48037 c. Assets Turnover Net Sales 48037 = 1.45 times Average Total Asset (30153+36309)/2= 33231 d. Return on Assets Profit 1081 = 0.033 = 3.3% Average Total Asset (30153+36309)/2= 33231 e. Return on Equity Profit 1081 = 0.093 = 9.3% Average Shareholders' Equity (12119+11234)/2= 11677 a