Refer to the financial statements of Canadian Tire Corporation in Appendix A of this book.
1. Does the company disclose its revenue recognition policy? What point in time does it use to recognize revenue?
2. Compute the company’s gross profit percentage for the most recent two years. Has it risen or fallen? Explain the meaning of the change.
3. Does the company report an allowance for doubtful accounts in the notes to its financial statements? If so, review the details disclosed by the company and explain what they mean.
4. Compute Canadian Tire’s receivables turnover ratio for 2012. Is it significantly different from the ratio computed for Gildan in the Key Ratio Analysis section in the chapter? If so, what are some possible reasons for the difference?
5. What does the company include in “ cash and cash equivalents”? How close do you think the disclosed amount is to the actual fair market value of these assets?

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