Your company lassonde run into a scandal similar in financial impact to the one faced by Volkswagen in 2015. Your company will have to create a provision equal in size to 10% of its most recent revenues. Assume that the impact will make it too expensive to raise cash from financing. That is, assume the company will be seen as riskier, making it unfeasible to raise the funds by issuing shares or borrowing. That means that the costs to deal with the scandal will have to be paid out of operating cash flows. Assume that this will take two fiscal years.

Your job is to prepare a report for the Board of Directors advising them on how well the company will be able to survive this financial event. You should NOT prepare pro forma statements to forecast the future. Just interpret the event in terms of the impacts the scandal will have on the companys (a) financial position, (b) financial performance, and (c) cash flows, as disclosed by the company in its most recent annual financial statements. Use an appropriate combination of financial ratios, trend analysis, common size analysis, and raw financial numbers to support your argument.

Lassonde Industries Inc. Consolidated Statements of Comprehensive Income (in thousands of Canadian dollars) (audited) \begin{tabular}{lccc} \hline & & & \\ & & \multicolumn{2}{c}{ Years ended } \\ & Note & Dec. 31, 2022 & Dec. 31, 2021 \\ \hline & $ & & \\ Profit & & 53,334 & 78,452 \\ \hline \end{tabular} Other comprehensive income: To be reclassified subsequently to profit or loss: Net change in the cash flow hedge of financial assets and liabilities: Gains (losses) on financial instruments designated as hedges Reclassification of (gains) losses on financial instruments designated as hedges Income tax expense 10 (606) 175 Translation difference: Exchange difference on translating foreign operations 38,924 (2,173) \begin{tabular}{|c|c|c|c|} \hline \begin{tabular}{l} designated as hedges \\ Income tax expense \end{tabular} & 10 & \begin{tabular}{l} (606) \\ (261) \end{tabular} & \begin{tabular}{r} 2,567 \\ (695) \end{tabular} \\ \hline Income tax expense & & 755 & 2,047 \\ \hline \multicolumn{4}{|l|}{ Translation difference: } \\ \hline \multirow[t]{2}{*}{ Exchange difference on translating foreign operations } & & 38,924 & (2,173) \\ \hline & & 39,679 & (126) \\ \hline \multicolumn{4}{|l|}{ Not to be reclassified subsequently to profit or loss: } \\ \hline \multicolumn{4}{|l|}{ Net change in the cash flow hedge of non-financial assets: } \\ \hline Gains (losses) on financial instruments designated as hedges & & 11,485 & (1,130) \\ \hline \multirow[t]{2}{*}{ Income tax expense } & 10 & (3,002) & 299 \\ \hline & & 8,483 & (831) \\ \hline \multicolumn{4}{|l|}{ Benefit cost of the defined benefit plans: } \\ \hline Remeasurements of the net defined benefit asset or liability & 24 & 15,001 & 13,390 \\ \hline \multirow[t]{3}{*}{ Income tax expense } & 10 & (3,959) & (3,541) \\ \hline & & 11,042 & 9,849 \\ \hline & & 19,525 & 9,018 \\ \hline Total other comprehensive income (loss) & & 59,204 & 8,892 \\ \hline Comprehensive income & & 112,538 & 87,344 \\ \hline \multicolumn{4}{|l|}{ Attributable to: } \\ \hline Corporation's shareholders & & 109,114 & 86,304 \\ \hline \multirow[t]{2}{*}{ Non-controlling interest } & 22 & 3,424 & 1,040 \\ \hline & & 112,538 & 87,344 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|} \hline \multicolumn{4}{|l|}{ Assets } \\ \hline \multicolumn{4}{|l|}{ Current } \\ \hline Cash and cash equivalents & & 2,678 & 305 \\ \hline Accounts receivable & 12 & 173,654 & 154,369 \\ \hline Income tax recoverable & & 12,206 & 4,587 \\ \hline Inventories & 13 & 414,043 & 309,748 \\ \hline Derivative instruments & & 7,417 & 1,657 \\ \hline \multirow[t]{2}{*}{ Other current assets } & 14 & 28,765 & 19,083 \\ \hline & & 638,763 & 489,749 \\ \hline Derivative instruments & & 279 & 578 \\ \hline Investment in an associate & & 7,439 & 8,353 \\ \hline Property, plant and equipment & 16 & 399,969 & 384,389 \\ \hline Intangible assets & 17 & 198,394 & 203,983 \\ \hline Net defined benefit asset & 24 & 30,855 & 22,990 \\ \hline Other non-current assets & & 854 & 1,182 \\ \hline \multirow[t]{2}{*}{ Goodwill } & 18 & 328,162 & 308,371 \\ \hline & & 1,604,715 & 1,419,595 \\ \hline \multicolumn{4}{|l|}{ Liabilities } \\ \hline \multicolumn{4}{|l|}{ Current } \\ \hline Bank overdraft & & 4,388 & 5,028 \\ \hline Accounts payable and accrued liabilities & 19 & 307,037 & 269,115 \\ \hline Income tax payable & & - & 5,638 \\ \hline Derivative instruments & & 673 & 1,102 \\ \hline Other current liabilities & & 5,632 & 5,068 \\ \hline \multirow[t]{2}{*}{ Current portion of long-term debt } & 20 & 100,821 & 84,387 \\ \hline & & 418,551 & 370,338 \\ \hline Derivative instruments & & - & 16 \\ \hline Long-term debt & 20 & 148,574 & 91,045 \\ \hline Long-term incentive plan liabilities & & 1,442 & 852 \\ \hline Pension plan liabilities & 24 & 523 & 413 \\ \hline \multirow[t]{2}{*}{ Deferred tax liabilities } & 10 & 98,058 & 91,424 \\ \hline & & 667,148 & 554,088 \\ \hline \multicolumn{4}{|l|}{ Shareholders' equity } \\ \hline Share capital & 22 & 46,660 & 48,136 \\ \hline Contributed surplus & & 1,360 & 1,375 \\ \hline Accumulated other reserves & 22 & 94,102 & 55,760 \\ \hline Retained earnings & & 735,044 & 703,144 \\ \hline \multirow[t]{3}{*}{ Non-controlling interest } & 22 & 60,401 & 57,092 \\ \hline & & 937,567 & 865,507 \\ \hline & & 1,604,715 & 1,419,595 \\ \hline \multicolumn{4}{|l|}{ Approved by the Board of Directors } \\ \hline \end{tabular} Lassonde Industries Inc. Consolidated Statements of Comprehensive Income (in thousands of Canadian dollars) (audited) \begin{tabular}{|c|c|c|c|} \hline & \multirow[b]{2}{*}{ Note } & \multicolumn{2}{|c|}{ Years ended } \\ \hline & & Dec. 31, 2022 & Dec. 31, 2021 \\ \hline & & $ & $ \\ \hline Profit & & 53,334 & 78,452 \\ \hline \multicolumn{4}{|l|}{ Other comprehensive income: } \\ \hline \multicolumn{4}{|l|}{ To be reclassified subsequently to profit or loss: } \\ \hline \multicolumn{4}{|l|}{ Net change in the cash flow hedge of financial assets and liabilities: } \\ \hline Gains (losses) on financial instruments designated as hedges & & 1,622 & 175 \\ \hline \begin{tabular}{l} Reclassification of (gains) losses on financial instruments \\ designated as hedges \end{tabular} & & (606) & 2,567 \\ \hline \multirow[t]{2}{*}{ Income tax expense } & 10 & (261) & (695) \\ \hline & & 755 & 2,047 \\ \hline \multicolumn{4}{|l|}{ Translation difference: } \\ \hline \multirow[t]{2}{*}{ Exchange difference on translating foreign operations } & & 38,924 & (2,173) \\ \hline & & 39,679 & (126) \\ \hline \end{tabular} Not to be reclassified subsequently to profit or loss: \begin{tabular}{|c|c|c|c|} \hline \begin{tabular}{l} Net change in the cash flow hedge of non-financial assets: \\ Gains (losses) on financial instruments designated as hedges \\ Income tax expense \end{tabular} & 10 & \begin{tabular}{l} 11,485 \\ (3,002) \end{tabular} & \begin{tabular}{c} (1,130) \\ 299 \end{tabular} \\ \hline Income tax expense & & 8,483 & (831) \\ \hline \multicolumn{4}{|l|}{ Benefit cost of the defined benefit plans: } \\ \hline Remeasurements of the net defined benefit asset or liability & 24 & 15,001 & 13,390 \\ \hline \multirow[t]{3}{*}{ Income tax expense } & 10 & (3,959) & (3,541) \\ \hline & & 11,042 & 9,849 \\ \hline & & 19,525 & 9,018 \\ \hline Total other comprehensive income (loss) & & 59,204 & 8,892 \\ \hline Comprehensive income & & 112,538 & 87,344 \\ \hline \multicolumn{4}{|l|}{ Attributable to: } \\ \hline Corporation's shareholders & & 109,114 & 86,304 \\ \hline \multirow[t]{2}{*}{ Non-controlling interest } & 22 & 3,424 & 1,040 \\ \hline & & 112,538 & 87,344 \\ \hline \end{tabular}