The objective of this exercise is to develop your ability to perform a comprehensive analysis on a set of financial statements. Use the copy of the 2018 annual report of Dollarama Inc. (year end January 28, 2018) from Appendix A. You may need to go to Dollaramas website to get the full annual report including the annual information return.

Requirement 1 Basic information (provide sources):

Using a site such as D&B Hoovers, Google Finance, or Yahoo Finance, look up discount stores. List two competitors of Dollarama.

Describe Dollaramas risks related to business operations.

Does Dollarama own any other companies?

What is Dollaramas largest asset? Largest liability?

How many common shares are they authorized to issue? How many are issued? Outstanding?

Did Dollarama repurchase any common shares during the year? If so, how many?

When does Dollarama record revenue?

What inventory method does Dollarama use?

Does Dollarama have any business interests in foreign countries? Explain your answer.

Requirement 2 Using information you have learned in the text and elsewhere, evaluate Dollaramas profitability for 2018 compared with 2017. In your analysis, you should compute the following ratios and then comment on what those ratios indicate. NOTE: You will have to look up the annual report for 2017 to obtain total assets and shareholders equity for 2016. See www.sedar.com or use Dollaramas website.

Return on sales

Asset turnover

Return on assets

Leverage ratio

Return on equity

Gross profit percentage

Earnings per share (show computation)

Book value per share

Requirement 3 Evaluate the companys ability to sell inventory and pay debts during 2018 and 2017. In your analysis, you should compute the following ratios, and then comment on what those ratios indicate. Since the 2018 annual report only includes the balance sheets for 2018 and 2017, you will need to look up the annual report for 2017 for information about 2016 accounts receivable, inventory, and accounts payable.

Accounts receivable turnover and days sales outstanding

Inventory turnover and days inventory outstanding

Accounts payable turnover and days payable outstanding

Cash conversion cycle

Current ratio

Quick (acid-test) ratio

Debt ratio

Times interest earned