Canadian Tire Corporation in 2010 are financially healthy
05-29, 2014
Canadian Tire Corporation in 2010 are financially healthy
1.Introduction
Canadian Tire Corporation, Limited has undoubtedly became one of Canada's best-known corporations for now."Canadian Tire Corporation is working with this consumer insight for a new brand positioning campaign that celebrates the 'joys and jobs' of living in the north. "(Kuburas,2011,p.9).The company has a inter-related framework of businesses including retailing hardgoods, petroleum, apparel and financial services as well as automotive services. More than 68,000 people are employed all over Canada. Retail operations of this company is consist of Canadian Tire, Canadian Tire Petroleum, gas stations,women' s, men' s, the core retail and automotive service operation, as well as work clothing retailer Mark's Work Wearhouse, FGL, retailing auto parts and accessories."As everyone knows,more than just tires roll out of the greater than 475 stores run by Canadian Tire Corp associate dealers across Canada."(Kalbfleisch,2009,p.20) Canadian Tire Corporation, Limited's head office is in Toronto, Ontario.As a famous retailer,the firm is widely known for its Canadian Tire "money" .That is a pioneering program which was first introduced in 1958. Also, the firm is famous for its innovative advertising achieved through cross-merchandising."Canadian Tire's new facility relies on a high-speed conveyor,wedge merge and a sliding shoe sorter to handle 7,200 canons per hour during peak periods."(Trebilcock,2010,p.20-21)This essay will first discuss the background information and history of Canadian Tire Corporation including its business, its marketing programs, the Corporation's products and services, and its social responsibilities.Also, its business context will be concerned so as to analysis the financial health condition.Following this,it will give a comparison of the financial statistics of Canadian Tire Corporationin from the last two years by calculating the basic accounting data.After that,it will discuss the capital structure,profit ability and the financial leverage of Canadian Tire Corporation.Finally,it will give the conclusion whether Canadian Tire Corporation is healthy in finance.#p#分頁標(biāo)題#e#
2.The Background Information and History of Canadian Tire Corporation
Canadian Tire Corporation, Limited was set up in the 1920's.At that time,the Billes' brothers( James William Billes and Alfred Jackson Billes) got their first savings (1800$) invested in The Hamilton Tire and Garage Ltd and then sold it out in 1923 when they moved several times.Eventually they settled into their first reasonably stable site in 639 Yonge Street.In 1927,they formed their own corporation named “Canadian Tire Corporation, Limited”. Seven years later, Canadian Tire Corporation 's first official associate store was opened in Hamilton.
The first Canadian Tire contents are formed of a price list in the shape of a 24" x 10" folder. They were then transported to consumers in Southern Ontario, this initial price sheet folder indicated the beginning of the Mail Order Department at Canadian Tire. "In the '50s,as the suburbs exploded,Canadian Tire was selling all sorts of products for home and yard to the growing middle class."(Martin,2008.p.30)Until January 2th 2010 , the company has over 1216 stores(including CTR retail stores,partsource stores,mark's retail stores, petroleum gas bar locations) and became a publicly traded company on the Toronto Stock Exchange. By seeing the stock price of Canadian Tire Corporation, Limited,it is obvious that the firm has gain a significant success and grow fast in the latest years. Now, the firm has four different stores and complete services chains.(Wikipedia, January, 2011)
3. Business of Canadian Tire Corporation
As a considerable company,Canadian Tire Corporation has numerous structures of business from retailing hardgoods, petroleum, apparel and financial services as well as automotive services.A brief introduction will be given below to these business.#p#分頁標(biāo)題#e#
3.1 Canadian Tire Retail
Canadian Tire Retail is one of the most-shopped retailers in Canada.Based on the official website of Canadian Tire Corporation,there are more than 450 stores opened by Associate Dealers across Canada.Because of the fast developing technology, online shopping is becoming more and more common for its convenience and time-saving.As a result, canadian tire retail becomes the top three in Canada for its e-commerce.
3.1.1 Marketing Programs
Canadian Tire Corporation promulgated its own money,the Canadian Tire “Money”(CTM),so as to attract more clients .Once a client buys some products of Canadian Tire Corporation in cash,he or she will be returned a sum of CTM.The numbers depend on how much products they take home.The CTM is just like the real money.However it must be spent in the shop of Canadian Tire Corporation.
3.1.2 Products and Services
Automotive products are the most-selling products on the list of all products.It gives consumers who want to fix their own cars the chance to realize their dreams.Other products like home products, sports and leisure supplies are also on sale.In Canada,many car-repairing services like fixing of cars,installing different auto parts of car and other problems for repair.
4. Financial Report of Canadian Tire Corporation
In order to get a considerable description of the financial healthy condition of Canadian Tire Corporation, financial data of different years traced from its financial report should be well researched.
(Canadian Tire Annual Report,2009)
Here is the balance sheet of Canadian tire corporation of 2009 and 2010
(Value Sciences Inc , FP industry Report,Feb,7,2012)#p#分頁標(biāo)題#e#
According to the balance sheet,short-term liquidity of Canadian Tire Corporation was good.Here are the reasons for the firm.(all the final date are considered in Jan 2th,2010)
Liquidity Ratio==1.994
It showed that Canadian Tire Corporation had a stable short-term liquidity ,which meant the firm had a enough working capital to pay maturity debt.
Therefore,creditors of the firm would have less risk to lose their money.It also meant the capital of creditors are relatively safe.
Quick Ratio==1.84
It shows that for every 1$ firms have 1.84$ easy-to-current liabilities, It's higher than 1.The quick ratio in Jan 3th,2009 is 1.53 which is lower than 2010.So,Canadian Tire Corporation might have monetary assets that should be invented in 2010.The average quick ratio of retail industry in 2010 is 1.26.A little lower than Canadian Tire Corporation.However,Canadian Tire Corporation's quick ratio is below 2 which is a safe critical value. After the research, short-term solvency of Canadian Tire Corporation is good.
Analysis of long-term solvency is the prediction whether the enterprise has enough ability to repay the principal and interest on long-term debt. However, in the analysis of long-term solvency, short-term solvency should also be considered.For that, if the short-term solvency of an enterprise has some serious problems,its long-term solvency would also be affected.
Here are some financial data relating to the long-term solvency of Canadian Tire Corporation.
Debt ratio==0.54
Debt ratio reflects the total assets of the enterprise by the proportion of funds provided by the creditor. The smaller the ratio is, the smaller of the enterprise assets in the creditors claim part is, meanwhile,the provision part of the owner is larger,the level of the production assets to creditors are higher; conversely, the higher the rate of assets and liabilities , the lower level of creditor's rights are guaranteed , the higher the risk of creditors will face. According to experience, the debt ratio generally below 75% in order to show the balance of the normal.#p#分頁標(biāo)題#e#
Equity Ratio==0.46
Trend in net cash provided by operating activities==136.7
Interest coverage ratio==6.78
After having a full screen of the financial data of Canadian Tire Corporation on short and long term solvency,it is sure that the company has a good ability to pay back debt both short term and long term.Therefore it is beneficial for creditors to put their funds in Canadian Tire Corporation.
The operating capacity is defined by using the capital turnover rate of relevant indicators to reflect whether the company capital is efficiency-used, it shows that the ability of a enterprise for management and the operating of funds .The faster of the capital turnover rate,the better effect of the funds operation and management for the company.
Here are the financial data for the operating capability of the Canadian Tire Corporation.
Accounts receivable turnover==11.99 times
Although the accounts receivable turnover of Canadian Tire Corporation is not the highest,it's also good for the company to get its debts back in time,decrease the accounting fees and bad debts losses.Also,it's good for the assets liquidity and short term solvency of Canadian Tire Corporation.What's more, it can relatively increase the companies' profits of liquid assets.
Inventory turnover rate==6.56 times
Days to sell the average inventory==55.64 days
Inventory turnover ratio is a reflection of corporate sales conditions and inventory fund appropriation. Under normal circumstances, the higher the inventory turnover rate, ther less turnover days of inventories,meanwhile, capital turnover is faster and the corresponding profit rate is higher.Inventory turnover rate, not only concerned with production, procurement, sales but also reflects the management level of a company .Inventory turnover ratio of Canadian Tire Corporation in 2010 is 6.56 times while the whole industry is 7.87.#p#分頁標(biāo)題#e#
All in all,operating capacity of Canadian Tire Corporation is 1.31 times worse than the average industrial capability.
Profitability refers to the companies' profit ability. Profits are the most concerned factors both for inside staffs and outside staffs of company such as creditors,investors,managers,government staffs and board of directors. Profit is the return of investments that investors can get and the principal and interests of creditors receive.Also,it can measure the operators' operating performance and management efficiency of the concentrated expression.Moreover,it is the collective welfare facilities of the staffs . Therefore, the profit ability analysis for a company is very important.
Here are the financial data of the profitability of Canadian Tire Corporation.
Profit margin==5.92% (Jan 2th,2010)
Meanwhile,according to the data, profit margin in Jan 3th,2009 is 5.04%.
Though the comparison,the profit margin of Canadian Tire Corporation is 0.88% more than that in Jan 2th,2010 than in Jan 3th,2009.That means measures of profitability:of Canadian Tire Corporation is in steady growth.
The average profit margin of the whole industry is 5.64,slightly lower than Canadian Tire Corporation.
Earnings per share==5.56$
Earnings per share only represent a share in the proceeds, barely have continuity, so it can not be a judge of firm growth index alone.In other words,it should be considered as well as the other companies of the same industry.For instance,retail industry or supermarkets.
P/E of Canadian Tire Corporation in Jan3th,2010==12.26, less than 13.Meanwhile the company in Jan 2th,2009 is 14.02.Moreover, according to the data,P/E of the whole industry is 15.51 in 2010.Through comparison, it shows that Canadian Tire Corporation was slightly underestimate.Therefore, for investors,it is suggested that they buy the stocks of the company.#p#分頁標(biāo)題#e#
5.Conclusion
In conclusion, Canadian Tire Corporation in Jan 3th,2010 was financially healthy. Firstly, both the short term solvency and long time solvency of Canadian Tire Corporation are in good condition according to the financial data.Therefore,creditors of the company are suggested to have reassurance and the company has a nice goodwill.However, operating capacity of Canadian Tire Corporation is sightly worse than the whole industry,which means that the companies' ability to use various resource to earn profits efficiently is not perfect.Moreover,profitability of Canadian Tire Corporation is right cause the profit margin of the company is 0.88% more than the average level of the whole industry.Last bur not the least important, P/E of Canadian Tire Corporation is 12.26,less than 13.Also less than 15.51(the whole industry data).This shows that Canadian Tire Corporation was slightly underestimate.Therefore, for investors,it is suggested that they buy the stocks of the company and wait for the long time earnings.
Reference
Value Sciences Inc. (Feb,7,2012). FP industry Report. Retrieved March 20,2012,from http://www.fpinfomart.ca/
Wikipedia, the free encyclopedia.Canadian Tire. (January, 2011).Retrieved March 20,2012 ,fromhttp://en.wikipedia.org/wiki/Canadian_Tire
Canadian Tire Corporation.(2009).Canadian Tire Annual Report,76-149.Retrieved March 20,2012
Kuburas,Melita (Apr 1,2011). Canadian Tire bring it on. Trade Journals,9.,Retrieved from http://search.proquest.com/docview/859507067?accountid=13908
Trebilcock,Bob (Nov 12,2011). High-speed fulfilment. Machinery, 65(11), 20-21. Retrieved from http://search.proquest.com/docview/903303615?accountid=13908
Kalbfleisch,Steve (Nov/Dec 2009). Product Flow:Canadian Tire improves dock handling. Business And Economics-Management, 33(6), 20. Retrieved from http://search.proquest.com/docview/200401175?accountid=13908#p#分頁標(biāo)題#e#
Martin,Russ (Jun 16,2008). Funny Money. Advertising And Public Relations,Business And Economics-Marketing And Purchasing,113(10), 30. Retrieved from http://search.proquest.com/docview/227221912?accountid=13908
1.Introduction
Canadian Tire Corporation, Limited has undoubtedly became one of Canada's best-known corporations for now."Canadian Tire Corporation is working with this consumer insight for a new brand positioning campaign that celebrates the 'joys and jobs' of living in the north. "(Kuburas,2011,p.9).The company has a inter-related framework of businesses including retailing hardgoods, petroleum, apparel and financial services as well as automotive services. More than 68,000 people are employed all over Canada. Retail operations of this company is consist of Canadian Tire, Canadian Tire Petroleum, gas stations,women' s, men' s, the core retail and automotive service operation, as well as work clothing retailer Mark's Work Wearhouse, FGL, retailing auto parts and accessories."As everyone knows,more than just tires roll out of the greater than 475 stores run by Canadian Tire Corp associate dealers across Canada."(Kalbfleisch,2009,p.20) Canadian Tire Corporation, Limited's head office is in Toronto, Ontario.As a famous retailer,the firm is widely known for its Canadian Tire "money" .That is a pioneering program which was first introduced in 1958. Also, the firm is famous for its innovative advertising achieved through cross-merchandising."Canadian Tire's new facility relies on a high-speed conveyor,wedge merge and a sliding shoe sorter to handle 7,200 canons per hour during peak periods."(Trebilcock,2010,p.20-21)This essay will first discuss the background information and history of Canadian Tire Corporation including its business, its marketing programs, the Corporation's products and services, and its social responsibilities.Also, its business context will be concerned so as to analysis the financial health condition.Following this,it will give a comparison of the financial statistics of Canadian Tire Corporationin from the last two years by calculating the basic accounting data.After that,it will discuss the capital structure,profit ability and the financial leverage of Canadian Tire Corporation.Finally,it will give the conclusion whether Canadian Tire Corporation is healthy in finance.#p#分頁標(biāo)題#e#
2.The Background Information and History of Canadian Tire Corporation
Canadian Tire Corporation, Limited was set up in the 1920's.At that time,the Billes' brothers( James William Billes and Alfred Jackson Billes) got their first savings (1800$) invested in The Hamilton Tire and Garage Ltd and then sold it out in 1923 when they moved several times.Eventually they settled into their first reasonably stable site in 639 Yonge Street.In 1927,they formed their own corporation named “Canadian Tire Corporation, Limited”. Seven years later, Canadian Tire Corporation 's first official associate store was opened in Hamilton.
The first Canadian Tire contents are formed of a price list in the shape of a 24" x 10" folder. They were then transported to consumers in Southern Ontario, this initial price sheet folder indicated the beginning of the Mail Order Department at Canadian Tire. "In the '50s,as the suburbs exploded,Canadian Tire was selling all sorts of products for home and yard to the growing middle class."(Martin,2008.p.30)Until January 2th 2010 , the company has over 1216 stores(including CTR retail stores,partsource stores,mark's retail stores, petroleum gas bar locations) and became a publicly traded company on the Toronto Stock Exchange. By seeing the stock price of Canadian Tire Corporation, Limited,it is obvious that the firm has gain a significant success and grow fast in the latest years. Now, the firm has four different stores and complete services chains.(Wikipedia, January, 2011)
3. Business of Canadian Tire Corporation
As a considerable company,Canadian Tire Corporation has numerous structures of business from retailing hardgoods, petroleum, apparel and financial services as well as automotive services.A brief introduction will be given below to these business.#p#分頁標(biāo)題#e#
3.1 Canadian Tire Retail
Canadian Tire Retail is one of the most-shopped retailers in Canada.Based on the official website of Canadian Tire Corporation,there are more than 450 stores opened by Associate Dealers across Canada.Because of the fast developing technology, online shopping is becoming more and more common for its convenience and time-saving.As a result, canadian tire retail becomes the top three in Canada for its e-commerce.
3.1.1 Marketing Programs
Canadian Tire Corporation promulgated its own money,the Canadian Tire “Money”(CTM),so as to attract more clients .Once a client buys some products of Canadian Tire Corporation in cash,he or she will be returned a sum of CTM.The numbers depend on how much products they take home.The CTM is just like the real money.However it must be spent in the shop of Canadian Tire Corporation.
3.1.2 Products and Services
Automotive products are the most-selling products on the list of all products.It gives consumers who want to fix their own cars the chance to realize their dreams.Other products like home products, sports and leisure supplies are also on sale.In Canada,many car-repairing services like fixing of cars,installing different auto parts of car and other problems for repair.
4. Financial Report of Canadian Tire Corporation
In order to get a considerable description of the financial healthy condition of Canadian Tire Corporation, financial data of different years traced from its financial report should be well researched.
(Canadian Tire Annual Report,2009)
Here is the balance sheet of Canadian tire corporation of 2009 and 2010
(Value Sciences Inc , FP industry Report,Feb,7,2012)#p#分頁標(biāo)題#e#
According to the balance sheet,short-term liquidity of Canadian Tire Corporation was good.Here are the reasons for the firm.(all the final date are considered in Jan 2th,2010)
Liquidity Ratio==1.994
It showed that Canadian Tire Corporation had a stable short-term liquidity ,which meant the firm had a enough working capital to pay maturity debt.
Therefore,creditors of the firm would have less risk to lose their money.It also meant the capital of creditors are relatively safe.
Quick Ratio==1.84
It shows that for every 1$ firms have 1.84$ easy-to-current liabilities, It's higher than 1.The quick ratio in Jan 3th,2009 is 1.53 which is lower than 2010.So,Canadian Tire Corporation might have monetary assets that should be invented in 2010.The average quick ratio of retail industry in 2010 is 1.26.A little lower than Canadian Tire Corporation.However,Canadian Tire Corporation's quick ratio is below 2 which is a safe critical value. After the research, short-term solvency of Canadian Tire Corporation is good.
Analysis of long-term solvency is the prediction whether the enterprise has enough ability to repay the principal and interest on long-term debt. However, in the analysis of long-term solvency, short-term solvency should also be considered.For that, if the short-term solvency of an enterprise has some serious problems,its long-term solvency would also be affected.
Here are some financial data relating to the long-term solvency of Canadian Tire Corporation.
Debt ratio==0.54
Debt ratio reflects the total assets of the enterprise by the proportion of funds provided by the creditor. The smaller the ratio is, the smaller of the enterprise assets in the creditors claim part is, meanwhile,the provision part of the owner is larger,the level of the production assets to creditors are higher; conversely, the higher the rate of assets and liabilities , the lower level of creditor's rights are guaranteed , the higher the risk of creditors will face. According to experience, the debt ratio generally below 75% in order to show the balance of the normal.#p#分頁標(biāo)題#e#
Equity Ratio==0.46
Trend in net cash provided by operating activities==136.7
Interest coverage ratio==6.78
After having a full screen of the financial data of Canadian Tire Corporation on short and long term solvency,it is sure that the company has a good ability to pay back debt both short term and long term.Therefore it is beneficial for creditors to put their funds in Canadian Tire Corporation.
The operating capacity is defined by using the capital turnover rate of relevant indicators to reflect whether the company capital is efficiency-used, it shows that the ability of a enterprise for management and the operating of funds .The faster of the capital turnover rate,the better effect of the funds operation and management for the company.
Here are the financial data for the operating capability of the Canadian Tire Corporation.
Accounts receivable turnover==11.99 times
Although the accounts receivable turnover of Canadian Tire Corporation is not the highest,it's also good for the company to get its debts back in time,decrease the accounting fees and bad debts losses.Also,it's good for the assets liquidity and short term solvency of Canadian Tire Corporation.What's more, it can relatively increase the companies' profits of liquid assets.
Inventory turnover rate==6.56 times
Days to sell the average inventory==55.64 days
Inventory turnover ratio is a reflection of corporate sales conditions and inventory fund appropriation. Under normal circumstances, the higher the inventory turnover rate, ther less turnover days of inventories,meanwhile, capital turnover is faster and the corresponding profit rate is higher.Inventory turnover rate, not only concerned with production, procurement, sales but also reflects the management level of a company .Inventory turnover ratio of Canadian Tire Corporation in 2010 is 6.56 times while the whole industry is 7.87.#p#分頁標(biāo)題#e#
All in all,operating capacity of Canadian Tire Corporation is 1.31 times worse than the average industrial capability.
Profitability refers to the companies' profit ability. Profits are the most concerned factors both for inside staffs and outside staffs of company such as creditors,investors,managers,government staffs and board of directors. Profit is the return of investments that investors can get and the principal and interests of creditors receive.Also,it can measure the operators' operating performance and management efficiency of the concentrated expression.Moreover,it is the collective welfare facilities of the staffs . Therefore, the profit ability analysis for a company is very important.
Here are the financial data of the profitability of Canadian Tire Corporation.
Profit margin==5.92% (Jan 2th,2010)
Meanwhile,according to the data, profit margin in Jan 3th,2009 is 5.04%.
Though the comparison,the profit margin of Canadian Tire Corporation is 0.88% more than that in Jan 2th,2010 than in Jan 3th,2009.That means measures of profitability:of Canadian Tire Corporation is in steady growth.
The average profit margin of the whole industry is 5.64,slightly lower than Canadian Tire Corporation.
Earnings per share==5.56$
Earnings per share only represent a share in the proceeds, barely have continuity, so it can not be a judge of firm growth index alone.In other words,it should be considered as well as the other companies of the same industry.For instance,retail industry or supermarkets.
P/E of Canadian Tire Corporation in Jan3th,2010==12.26, less than 13.Meanwhile the company in Jan 2th,2009 is 14.02.Moreover, according to the data,P/E of the whole industry is 15.51 in 2010.Through comparison, it shows that Canadian Tire Corporation was slightly underestimate.Therefore, for investors,it is suggested that they buy the stocks of the company.#p#分頁標(biāo)題#e#
5.Conclusion
In conclusion, Canadian Tire Corporation in Jan 3th,2010 was financially healthy. Firstly, both the short term solvency and long time solvency of Canadian Tire Corporation are in good condition according to the financial data.Therefore,creditors of the company are suggested to have reassurance and the company has a nice goodwill.However, operating capacity of Canadian Tire Corporation is sightly worse than the whole industry,which means that the companies' ability to use various resource to earn profits efficiently is not perfect.Moreover,profitability of Canadian Tire Corporation is right cause the profit margin of the company is 0.88% more than the average level of the whole industry.Last bur not the least important, P/E of Canadian Tire Corporation is 12.26,less than 13.Also less than 15.51(the whole industry data).This shows that Canadian Tire Corporation was slightly underestimate.Therefore, for investors,it is suggested that they buy the stocks of the company and wait for the long time earnings.
Reference
Value Sciences Inc. (Feb,7,2012). FP industry Report. Retrieved March 20,2012,from http://www.fpinfomart.ca/
Wikipedia, the free encyclopedia.Canadian Tire. (January, 2011).Retrieved March 20,2012 ,fromhttp://en.wikipedia.org/wiki/Canadian_Tire
Canadian Tire Corporation.(2009).Canadian Tire Annual Report,76-149.Retrieved March 20,2012
Kuburas,Melita (Apr 1,2011). Canadian Tire bring it on. Trade Journals,9.,Retrieved from http://search.proquest.com/docview/859507067?accountid=13908
Trebilcock,Bob (Nov 12,2011). High-speed fulfilment. Machinery, 65(11), 20-21. Retrieved from http://search.proquest.com/docview/903303615?accountid=13908
Kalbfleisch,Steve (Nov/Dec 2009). Product Flow:Canadian Tire improves dock handling. Business And Economics-Management, 33(6), 20. Retrieved from http://search.proquest.com/docview/200401175?accountid=13908#p#分頁標(biāo)題#e#
Martin,Russ (Jun 16,2008). Funny Money. Advertising And Public Relations,Business And Economics-Marketing And Purchasing,113(10), 30. Retrieved from http://search.proquest.com/docview/227221912?accountid=13908
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