You are the CFO of an investment firm. Evaluate twocompanies (Aritzia and Lululemon) and make a recommendation to the Board which company (either one, both or none) the firm should invest in. Keep the use of ratios to a maximum of 5 and your comment and recommendation to less than 150 words) The objective is to show your ability to perform a comprehensive analysis on a set of financial statements. Use the latest annual and quarterly financial statements for both companies to perform the analysis. Hint: Evaluation using common-size percentages for sales, gross profit, operating income, etc. Evaluate and compare companys ability to sell inventory (i.e. turnover) Evaluate and compare companys cash flows. Evaluate market price for both companies and compare it to book value (overpriced?)Based on an overall analysis (qualitative and quantitative), make your recommendation.
Aritzia Inc. Condensed Interim Consolidated Statements of Cash Flows For the 13-week and 28-week periods ended August 29, 2021 and August 30, 2020 lululemon athletica inc CONSOLIDATED STATEMENTS OF CASH FLOWS Urades Arts in thousands (Unaudited, in thousands of Canadian dollars) Two Quarters Ended August 1, 2021 August 2, 2020 13-week periods ended - August 29 August 30, 2021 2020 26-week periods ended August 29, August 30 2021 2020 s 353.0305 115.433 104 123 30.221 45.010 84176 21.912 (13.538 $ 39,848 S (874) S 57,751 S (27,345) 10,780 16,686 6,516 8,262 (264) (5,342) 8.450 18,588 7.355 2,147 (175) (80) 21,221 33,004 12,950 11,297 (537) (5.236) 18,815 33,034 14,745 3.126 (379) 716 (60) (10.818) 137.354 21.763 8.337) 5.487) 28.232 18.09. 47.403 19.260 456 (19.377 1265 1483 499.772 (138 194) (39.860) (56.381) (20.430) 35.967 25,322 53.868 (19.037) 43.926 (13.848) 7388 3.358 60,062 312 16.616 (1,217) 4,213 24.114 (1.450) ( 8,096 2,580 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization Stoce-based compensation expense Settlement of dervatives not designated in a hedging relationship Changes in operating assets and abilities Inventories Prepaid and receivable income tales Prepaid expenses and other current assets Other non-current assets Accounts payable Accrued inventory abilities Other accrued liabides Accrued compensation and related expenses Current and non-current income to payable Unredeemed gift card abity Right-of-use lease assets and current and non-current lease liabilities Other current and non-cutrentabilities Net cash provided by operating activites Cash flows from investing activities Purchase of property and equipment Settlement of net investment hedges Acquisition net of cash acquired Other investing activities Net cash used in investing activities Cash flows from financing actes Proceeds from settlement of stock-based compensation Shares withheld related to net share settlement of stock-based compensation Repurchase of common stock Net cash used in financing activities Efect of foreign currency exchange rate changes on cash and cash equivalents increase (decrease in cash and cash gunalents Cash and cash equivalents, beginning of period Cash and cash equivalents and ot period 4.315 96,098 37,301 161,210 36,149 22.972 4,305 10.780 (144494) (46.999 Note Operating activities Net income (loss) for the period Adjustments for Depreciation and amortization 7,8 Depreciation on right-of-use-assets 9 9 Finance expense 18 Stock-based compensation expense 15. 18 Amortization of deferred lease inducements Unrealized (gain) loss on equity derivative 13 contracts Other Income tax expense (recovery) 19 Rent concessions relating to lease liabilities 1,9 Proceeds from lease incentives Cash generated before non-cash working capital balances and interest and income taxes Net change in non-cash working capital 23 balances Cash generated before interest and income taxes Interest paid Interest paid on lease liabilities 9 Income taxes paid Net cash generated from operating activities Financing activities Proceeds from revolving credit facility 12 Repayment of principal on lease liabilities 9 Proceeds from options exercised 15 Shares repurchased for cancellation 14 Repayment of long-term debt 12 Net cash (used in generated from financing activities Investing activities Acquisition of CYC Design Corporation, net of cash acquired 5 Purchase of property and equipment 7 Purchase of intangible assets 8 Net cash used in investing activities Effect of exchange rate changes on cash and cash equivalents Change in cash and cash equivalents Cash and cash equivalents - Beginning of period Cash and cash equivalents - End of period Supplemental cash flow information (note 23) 119,070 (578) (5.572) (4.917) 108,003 (17,397) 19,904 (1.101) (6.935) (283) ( 11,585 165,515 (1.353) (10,419) (16,085) 137,658 (104.723) 10.983 (452581 1.000 545 323 46,929 (2.396) (8.686) (283) 35,584 10.000 201493 (18.293) 1,973 (14,720) 508 (26,385) 2,496 100,000 (18,059) 679 (523) 9.713 (45587 (254913) (290.767) 12012 39524 1.150 517 $ 317003 12.463 (30,957) (63.663) (82.157) (3.089) (570507 1.093,505 522.998 (75.000) ) (91,320) (14,212) [75,000) (98,889) 82.097 (32,555) (13.325) (221) (45,101) (13,108) (58) (13.168) (32,555) (23,708) (243) (56,506) (26,448) (600) (27,046) 3,336 (1.268) 386 (26.082) 157,878 (17,059) 224,313 207.254 (17,351) 149,147 (1.111) ( 80,504 117.750 S 131,796 S $ 131,796 S 207,254 Aritzia Inc. Condensed Interim Consolidated Statements of Cash Flows For the 13-week and 28-week periods ended August 29, 2021 and August 30, 2020 lululemon athletica inc CONSOLIDATED STATEMENTS OF CASH FLOWS Urades Arts in thousands (Unaudited, in thousands of Canadian dollars) Two Quarters Ended August 1, 2021 August 2, 2020 13-week periods ended - August 29 August 30, 2021 2020 26-week periods ended August 29, August 30 2021 2020 s 353.0305 115.433 104 123 30.221 45.010 84176 21.912 (13.538 $ 39,848 S (874) S 57,751 S (27,345) 10,780 16,686 6,516 8,262 (264) (5,342) 8.450 18,588 7.355 2,147 (175) (80) 21,221 33,004 12,950 11,297 (537) (5.236) 18,815 33,034 14,745 3.126 (379) 716 (60) (10.818) 137.354 21.763 8.337) 5.487) 28.232 18.09. 47.403 19.260 456 (19.377 1265 1483 499.772 (138 194) (39.860) (56.381) (20.430) 35.967 25,322 53.868 (19.037) 43.926 (13.848) 7388 3.358 60,062 312 16.616 (1,217) 4,213 24.114 (1.450) ( 8,096 2,580 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization Stoce-based compensation expense Settlement of dervatives not designated in a hedging relationship Changes in operating assets and abilities Inventories Prepaid and receivable income tales Prepaid expenses and other current assets Other non-current assets Accounts payable Accrued inventory abilities Other accrued liabides Accrued compensation and related expenses Current and non-current income to payable Unredeemed gift card abity Right-of-use lease assets and current and non-current lease liabilities Other current and non-cutrentabilities Net cash provided by operating activites Cash flows from investing activities Purchase of property and equipment Settlement of net investment hedges Acquisition net of cash acquired Other investing activities Net cash used in investing activities Cash flows from financing actes Proceeds from settlement of stock-based compensation Shares withheld related to net share settlement of stock-based compensation Repurchase of common stock Net cash used in financing activities Efect of foreign currency exchange rate changes on cash and cash equivalents increase (decrease in cash and cash gunalents Cash and cash equivalents, beginning of period Cash and cash equivalents and ot period 4.315 96,098 37,301 161,210 36,149 22.972 4,305 10.780 (144494) (46.999 Note Operating activities Net income (loss) for the period Adjustments for Depreciation and amortization 7,8 Depreciation on right-of-use-assets 9 9 Finance expense 18 Stock-based compensation expense 15. 18 Amortization of deferred lease inducements Unrealized (gain) loss on equity derivative 13 contracts Other Income tax expense (recovery) 19 Rent concessions relating to lease liabilities 1,9 Proceeds from lease incentives Cash generated before non-cash working capital balances and interest and income taxes Net change in non-cash working capital 23 balances Cash generated before interest and income taxes Interest paid Interest paid on lease liabilities 9 Income taxes paid Net cash generated from operating activities Financing activities Proceeds from revolving credit facility 12 Repayment of principal on lease liabilities 9 Proceeds from options exercised 15 Shares repurchased for cancellation 14 Repayment of long-term debt 12 Net cash (used in generated from financing activities Investing activities Acquisition of CYC Design Corporation, net of cash acquired 5 Purchase of property and equipment 7 Purchase of intangible assets 8 Net cash used in investing activities Effect of exchange rate changes on cash and cash equivalents Change in cash and cash equivalents Cash and cash equivalents - Beginning of period Cash and cash equivalents - End of period Supplemental cash flow information (note 23) 119,070 (578) (5.572) (4.917) 108,003 (17,397) 19,904 (1.101) (6.935) (283) ( 11,585 165,515 (1.353) (10,419) (16,085) 137,658 (104.723) 10.983 (452581 1.000 545 323 46,929 (2.396) (8.686) (283) 35,584 10.000 201493 (18.293) 1,973 (14,720) 508 (26,385) 2,496 100,000 (18,059) 679 (523) 9.713 (45587 (254913) (290.767) 12012 39524 1.150 517 $ 317003 12.463 (30,957) (63.663) (82.157) (3.089) (570507 1.093,505 522.998 (75.000) ) (91,320) (14,212) [75,000) (98,889) 82.097 (32,555) (13.325) (221) (45,101) (13,108) (58) (13.168) (32,555) (23,708) (243) (56,506) (26,448) (600) (27,046) 3,336 (1.268) 386 (26.082) 157,878 (17,059) 224,313 207.254 (17,351) 149,147 (1.111) ( 80,504 117.750 S 131,796 S $ 131,796 S 207,254
