The financial statements of Jean Coutu are presented in Appendix B, following the financial statements for Shoppers

Question:

The financial statements of Jean Coutu are presented in Appendix B, following the financial statements for Shoppers Drug Mart in Appendix A.

Instructions

(a) Calculate the following ratios for Jean Coutu and Shoppers Drug Mart for 2012:

1. Cash current debt coverage

2. Current ratio

3. Cash total debt coverage

4. Debt to total assets

5. Times interest earned

6. Free cash flow

(b) Compare the liquidity and solvency of each company from the ratios calculated in part (a).

(c) By reviewing the statement of cash flows for each company, which one is more committed to growth? Which one is more committed to paying down debt? Which one spends more of its operating cash flows on dividends?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Solvency
Solvency means the ability of a business to fulfill its non-current financial liabilities. Often you have heard that the company X went insolvent, this means that the company X is no longer able to settle its noncurrent financial...