Use the attached financial statements to answer the questions.

Questions:

1)What happened to total Shareholders Equity from 2016 to 2017? What was the largestcontributing factor?Why might a board of directors make this decision?

2)Calculate the following for both years;

a.Inventory turnover ratio (for 2016 just use one year for the average inventory)

b.Days to sell inventory

c.Accounts payable turnover (assume general, administrative expenses are creditpurchases) (for 2016 just use one year for the average)

d.Accounts payable payment period

3) What was the free cash flow for 2017? What does this number mean or represent to a user of the financial statements?

A B C D E DOLLARAMA INC. WN - Consolidated Statement of Financial Position as at (Expressed in thousands of Canadian dollars) January 29, January 31, 2017 2016 Note Assets Current assets Cash and cash equivalents CA 62,015 $ 59,178 Accounts receivable 15,386 11,118 Deposits and prepaid expenses 7,162 8,900 12 Merchandise inventories 465,715 470,195 13 Derivative financial instruments 14 8,787 67,542 14 559,065 616,933 15 Non-current assets 16 Property, plant and equipment 437,089 332,225 17 Intangible assets 139,515 136,934 18 Goodwill 727,782 727,782 19 Total assets 1,863,451 1,813,874 20 21 Liabilities and shareholders' equity 22 Current liabilities 23 Accounts payable and accrued liabilities 8 198,486 166,171 24 Dividend payable 11,591 11,087 25 Income taxes payable 16,597 45,638 26 Derivative financial instruments 14 8,085 27 Finance lease obligations 588 28 Current portion of long-term debt 9 278,643 3,542 29 513,402 227,026 30 Non-current liabilities 31 Long-term debt 9 1,050,101 920,772 32 Deterred rent and lease inducements 11 81,827 71,632 33 Deterred income taxes 13 117,837 127,592 34 Total liabilities 1,763,167 1,347,022 35 36 Shareholders' equity 37 Share capital 12 420,266 439,296 38 Contributed surplus 24,321 20,136 39 Retained Earnings (Deficit) 12 (342,957) (62,375) 40 Accumulated other comprehensive income (loss) 12 (1,346) 69,795 41 Total shareholders' equity 100,284 466,852 42 43 Total liabilities and shareholders' equity $ 1,863,451 $ 1,813,874 44A B C D PULLAKAMA INC. Consolidated Statement of Cash Flows for the years ended (Expressed in thousands of Canadian dollars) Note 29-Jan-17 31-Jan-16 Operating activities Net earnings for the year 445, 636 385,146 Adjustments for: Depreciation of property, plant and equipment and 57,748 48,085 Amortization of deferred tenant allowances 11 (4,795) (4,929) Amortization of deferred leasing costs 519 584 Amortization of debt issue costs 1,481 1,301 Recognition of realized gains on foreign exchange contracts (46, 269) (76, 665) 13 Cash settlement of gains on foreign exchange contracts 16,108 97,921 14 Deferred lease inducements 11 6,020 4, 811 15 Deferred tenant allowances 11 8,970 11,275 16 Share-based compensation 12 6,932 6,114 Financing costs on long-term debt 268 (304) 18 Deferred income taxes 13 16,105 4, 118 19 Loss on disposal of assets 40 641 20 508,763 478,098 21 Changes in non-cash working capital components 18 (3,595) (28,861) 22 Net cash generated from operating activities 505,168 449,237 Investing activities 24 Additions to property, plant and equipment (153,574) (83,231) JO 25 Additions to intangible assets (12, 640) (11, 199 26 Proceeds on disposal of property, plant and equipment 462 670 27 Net cash used in investing activities (165,752) (93,760) 28 Financing activities Proceeds from long-term debt - Series 1 Floating Rate Notes 124,834 30 Net proceeds (repayments ) from (of) Credit Facility (120,000) 235,000 31 Proceeds from long-term debt - 2.337% Fixed Rate Notes 525,000 debt issue (2,319) (1,003) 33 Repayment of finance lease (588) (978) 34 Issuance of common shares 4,892 2,702 35 Dividends paid (46,936) (45,116) 36 Repurchase and cancellation of shares (696, 628) (651,941) 37 Net cash used in financing activities (336,579) (336,502) 38 39 Increase in cash and cash equivalents 2,837 18,975 40 Cash and cash equivalents - beginning of year 59, 178 40,203 41 Cash and cash equivalents - ending of year 62,015 59,178 42A B C D E DOLLARAMA INC. Consolidated Statement of Net Earnings and Comprehensive Income (Loss) for the years ended (Expressed in thousands of Canadian dollars, except share and per share amounts OO VOULAWN - Note 29-Jan-17 31-Jan-16 Sales 2,963,219 2,650,327 Cost of goods sold 17 1,801,935 1,617,051 Gross profit 1,161,284 1,033,276 General, administrative and store operating expenses 458,026 435,816 Depreciation and amortization 17 57,748 48,085 11 Operating income 645,510 549,375 12 Financing costs (Interest) 17 33,083 21,395 13 Earnings before income taxes 612,427 527,980 14 Income taxes 13 166,791 142,834 15 Net income for the year 445,636 385,146 16 17 Other comprehensive income (loss) 18 Items to be reclassified subsequently to net earnings 19 Unrealized gain (loss) on derivative financial instruments, net (97,001) 4,789 20 Income taxes relating to components of other comprehensive 25,860 (1,290) 21 Total other comprehensive income (loss), net of income (71,141) 3,499 22 Total comprehensive income for the year 374,495 388,645 23 24 25 Earnings per common share 26 Basic net earnings per common share 16 $3.75 $3.03 27 Diluted net earnings per common share 16 $3.71 $3.00 28 Weighted average number of common shares outstanding 16 118,998 127,271 29 Weighted average number of diluted common shares 16 120,243 128,420 30A B C D Statement of Shareholders Equity DOLLARAMA INC. Consolidated Statement of Changes in Shareholders' Equity for the years ended (Expressed in thousands of Canadian dollars, except share amounts) 00 ) 29-Jan-17 31-Jan-16 9 Number of common shares 10 Opening Balance 122,225,104 129,790,354 11 Repurchase and cancellation of shares (7,420,168) (7,729,391) 12 Issuance of common shares 246,413 164,141 13 Ending Balance 115, 051,349 122,225,104 14 15 Share capital 16 Opening Balance 439,296 462,734 17 Repurchase and cancellation of shares (26, 669) (27,456) 18 Issuance of common shares 4,892 2,702 19 Reclassification related to exercise of share options 2,747 1,316 20 Ending Balance $ 420,266 $ 439,296 21 22 Contributed surplus 23 Opening Balance 20,136 15,338 24 Share-based compensation 6,932 6,114 25 Reclassification related to exercise of share options (2,747) (1,316) 26 Ending Balance $ 24,321 20,136 27 28 Retained earnings/(deficit) 29 Opening Balance (62,375) 196,112 30 Net earnings for the year 445,636 385,146 31 Dividends declared (47,440) (45,722) 32 Repurchase and cancellation of shares (678,778) (597,911) 33 Ending Balance (342,957) $ (62,375) 34 35 Accumulated other comprehensive income (loss) 36 Opening Balance 69,795 66,296 37 Unrealized gain (loss) (71,141) 3,499 38 Ending Balance $ (1,346) $ 69,795 39 40 41 42 43 Total Shareholders Equity $ 100,284 $ 466,852 44