The statement of financial position and statement of income for High Liner Foods Incorporated are in Exhibits 12.11A and 12.11B. The statement of financial position and statement of earnings and losses for Clearwater Seafoods Incorporated are in Exhibits 12.11C and 12.11D. In Canada, High Liner Foods and Clearwater Seafoods are both in the seafood industry. Both companies harvest, process, and distribute seafood. Clearwater concentrates on shellfish such as lobster, scallops, clams, coldwater shrimp, and crab, whereas High Liner Foods has a broader product line and includes various species of fish as well as shellfish. EXHIBIT 12.11A High Liner Foods Incorporated’s 2016 Consolidated Statement of Financial Position

EXHIBIT 12.11B High Liner Foods Incorporated’s 2016 Consolidated Statement of Income

EXHIBIT 12.11C Clearwater Seafoods Incorporated’s 2016 Consolidated Statement of Financial Position

EXHIBIT 12.11D Clearwater Seafoods Incorporated’s 2016 Consolidated Statement of Earnings (Loss)

Required

Use the financial statements for High Liner Foods and Clearwater Seafoods to answer the following questions:

a. Prepare a common-size analysis of the statements of income (loss) for the two companies for both years. Why do you think the profit margins are so diff erent for the two companies? In which areas
does High Liner Foods seem to have an advantage? In which areas does Clearwater Seafoods have an advantage?

b. Compare the current and quick ratios for the two companies. Which company is more liquid? Are you surprised by the large difference between the current ratio and the quick ratio for the companies? Why or why not?

c. Compare the inventory turnover of the two companies.

Transcribed Image Text:

(in thousands of United States dollars) December 31, January 2, Notes 2016 2016 ASSETS Current $ 18,252 $ 1,043 Cash Accounts receivable 75,190 76,335 Income taxes receivable 3,783 5,218 Other financial assets 22 1,705 6,453 Inventories 252,118 261,771 Prepaid expenses 2,051 3,340 Total current assets 354,388 352,871 Non-current Property, plant and equipment 111,322 115,879 Deferred income taxes 2,290 17 2,495 Other receivables and miscellaneous assets 1,683 22 864 Intangible assets 102,315 97,176 Goodwill 118,101 117,824 Total non-current assets 340,196 329,753 Total assets $684,141 $693,067 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities $ 621 $ 17,158 Bank loans 10 Accounts payable and accrued liabilities 135,272 11 120,336 Provisions 12 386 263 Other current financial liabilities 22 1,626 817 Other current liabilities 416 December 31, January 2, Notes 2016 2016 Income taxes payable 851 2,242 Current portion of long-term debt 13 11,816 Current portion of finance lease obligations 13 721 1,015 Total current liabilities 139,893 153,647 Non-current liabilities Long-term debt 13 266,327 281,017 Other long-term financial liabilities 22 196 89 Other long-term liabilities 888 483 Long-term finance lease obligations 13 702 715 Deferred income taxes 17 45,183 46,966 Future employee benefits 14 8,190 9,631 Total non-current liabilities 321,486 338,901 Total liabilities 461,379 492,548 Shareholders' equity Common shares 15 86,094 85,282 Contributed surplus 14,654 13,999 Retained earnings 146,340 125,843 Accumulated other comprehensive loss (24,326) (24,605) Total shareholders' equity 222,762 200,519 Total liabilities and shareholders' equity $684,141 $693,067 December 31, January 2, Notes 2016 2016 Income taxes payable 851 2,242 Current portion of long-term debt 13 11,816 Current portion of finance lease obligations 13 721 1,015 Total current liabilities 139,893 153,647 Non-current liabilities Long-term debt 13 266,327 281,017 Other long-term financial liabilities 22 196 89 Other long-term liabilities 888 483 Long-term finance lease obligations 13 702 715 Deferred income taxes 17 45,183 46,966 Future employee benefits 14 8,190 9,631 Total non-current liabilities 321,486 338,901 Total liabilities 461,379 492,548 Shareholders' equity Common shares 15 86,094 85,282 Contributed surplus 14,654 13,999 Retained earnings 146,340 125,843 Accumulated other comprehensive loss (24,326) (24,605) Total shareholders' equity 222,762 200,519 Total liabilities and shareholders' equity $684,141 $693,067