The 2014 financial statements (for its 53-week period ended January 3, 2015) and 10-year financial review of Canadian Tire Corporation, Limited can be found at www.sedar.com or on the company's website.
Instructions
1. What makes up Canadian Tire's current liabilities? Suggest at least five different types of liabilities that are likely included in "trade and other payables." What is included in deposits?
2. What were Canadian Tire's working capital, acid-test ratio, and current ratio for the two most recent years of data that are provided? How do these results compare with the measures over the last five years? Comment on the company's current liquidity in general, and compared it with its liquidity five years ago. What is the 2014 inventory turnover and what role does this ratio play in assessing liquidity in general, and for Canadian Tire specifically? What is in the accounts receivable and what role does it play in assessing liquidity for Canadian Tire? Can a turnover ratio be calculated for these accounts receivable?
3. What is the current portion of long-term debt? Explain clearly what makes up this amount. If the company does not borrow any additional long-term funds during 2015, how much would you expect to see on the 2015 end-of-year balance sheet as the current portion of long-term debt? Explain clearly what would make up this amount. Are there any concerns arising from this amount?
4. What types of commitments and contingencies has Canadian Tire reported in its financial statements? Identify which items are commitments and which are contingencies. What is management's reaction to the contingencies?
5. What covenants does the company have to maintain under its existing debt agreements? Was it in compliance at the year end? (Hint: See the Capital Management Disclosures note.)

Answer rating: 100% (QA)

1 Current liabilities include Deposit C9507 million Trade and other payables C19612 million Current ... View the full answer