Excerpt coming from Essay:
Financial Evaluation
Reitmans
Alimentation Couche-Tard
Revenue
COGS
Major Profit
Downgrading + Experience
Operating Income
Investment Profits
Interest
EBIT
Tax Exp
Net Income
Funds
AR
Inventory
Prepaid Exp
Current Possessions
Investments
Capital Assets
Goodwill
Future Income Tax
LTA
Total Assets
Taxation payable
Current LT Debt
Current Financial obligations
LT Financial debt
Other LT Liabilities
Total Liabilities
Collateral
L & E
Reitmans was able to boost its success in 2006, compared with 2005. The company’s low profit superior to 13. 55% via 9. 99%; its operating profit increased to being unfaithful. 7% coming from 5. 98%; and its net profit better to 7. 33% via 4. 7%. This implies that the improvement inside the company’s success is largely attributable to the improvement inside the top series, with the cost of goods sold being a decrease percentage of revenues in 2005 than 2004. Whether this is an event of driving by costs with suppliers or increasing rates to customers cannot be determined from the economic statements, but from the responses in the annual report. Reitmans achieved superior gross margins in a few ways. The most important was advanced purchases of U. T. dollar arrays when the Canadian dollar just visited a high benefit, lowering the cost of the goods in C$ terms. The company as well cited “effective cost hold at the two store and overhead levels and the significant efficiency advancements in the procedure of our source chain activities” (p. doze, 2005 Total annual Report). Due to the part, Couche-Tard saw the profit just improve slightly, from 1 . 54% to 1. 84%. The gross and operating earnings saw very little change throughout the two years.
three to four.
Reitmans
Couche-Tard
2005
2005
2010
2009
Current Proportion
1 . 70631
1 . 909195
1 . 167743
1 . 070342
Debt-Equity
zero. 408824
zero. 699933
1 . 289971
1 ) 45543
Gross Margin
13. 55%
9. 99%
12-15. 53%
15. 44%
Net Margin
7. 33%
5. 70%
1 ) 84%
1 ) 54%
Equity-Asset
70. 98%
58. 83%
43. 67%
40. 73%
From this research, both firms have superior the debt-equity and asset-equity ratios. Nevertheless , the improvement for Reitmans is significantly a lot better than the improved for Couche-Tard. Reitmans paid down a substantial amount of its debt over the course of 12 months, and this allowed it to lessen its debt-equity ratio from 70% to 41%. Couche-Tard’s debt-equity ratio is lower than it was for 1 . twenty eight compared with 1 . 45, nevertheless is still much higher than Reitmans. Couche-Tard did not add any kind of new long lasting debt, but it did not spend any down, so it is improvement was not as great.
5. Over time, Reitmans tends to make the better investment. You will discover two reasons behind this suggestion. The first is which the company provides improved the financial percentages significantly. By paying down a great deal of it is long-term debt, Reitmans features set the stage for the dramatic improvement in its collateral market value in the coming years. With much less of the provider’s profits heading towards debts service, more of those profits are going to retained earnings. Pertaining to the value investor, this can only be considered as a good thing. The other reason is that the company is continuing to grow. Reitmans is regularly adding retailers, and new concepts to its collection. This is enabling the company to grow it is operations continuously over the years, inspite of being in a relatively fully developed market. That they are able to accomplish this will concurrently paying down their particular debt is impressive via a financial management standpoint. In contrast, Couche-Tard is also growing, nevertheless has not used the stage aggressive method to paying down their debt. They have
