Cabou Coffee and Fazer Group: Financial Statements Ratio Analysis
Not what you're looking for?
We will continue to review the financial statements of Cabou Coffee and Fazer Group to learn additional information. The emphasis of this case is to review the income statement, balance sheet and computation of ratios.
Review the financial statements for the companies and answer the following questions for the last reporting year:
Balance Sheet
- What components of stockholders' equity do each of the companies disclose?
- Do the companies have preferred stock shares outstanding? If so, what special features do these shares contain?
- Do any of the companies report treasury shares? If so, do the companies disclose the reason for reacquiring the shares?
Income Statement
- What are the basic and diluted earnings per share for each company?
- Have the companies reported any discontinued operations for the last year?
- Do the companies disclose any stock compensation plans? If so, are they reporting such plans under the fair value or intrinsic value methods? What was the value of compensation expense measured for any outstanding stock option plans?
Financial Ratios
Compute the following ratios. Also, interpret and assess each group of ratios for the company. What type of story are the ratios telling the analyst?
Profitability ratios:
Gross profit margin
Net profit margin
Return on stockholders' equity
Liquidity ratios:
Current ratio
Quick ratio
Inventory turnover
Leverage ratios:
Debt-to-assets
Debt-to-equity
Times-covered ratio
What type of information do you find in footnotes to the financial statements?
Do you find the balance sheet, income statement or other measures such as ratios the most informative? Comment of the advantages and disadvantages of using ratios for analysis.
Purchase this Solution
Solution Summary
Your tutorial is 775 words and includes print-screens of sections of the financial reports for your inspection. Ratios for 2011 for both Caribou and Fazer are shown in Excel, with the numerator and denominator shown so you can see how each amount was constructed.
Solution Preview
Caribou Coffee = "C"
Fazer Group = "F"
Balance Sheet
- What components of stockholders' equity do each of the companies disclose?
As you see from the cut and pasted equity sections (see attached), C shows much more detail than F. For instance, the number of shares authorized, the par value are shown for C but not for F. C has both preferred and common stock while F only has one class of stock.
- Do the companies have preferred stock shares outstanding? If so, what special features do these shares contain?
Only Caribou has preferred stock and it has not been issued yet (see zero amounts in the equity section (attached).
- Do any of the companies report treasury shares? If so, do the companies disclose the reason for reacquiring the shares?
Neither firm has treasury stock.
Income Statement
- What are the basic and diluted earnings per share for each company?
C: $1.75 per share basic EPS and $1.69 per share diluted EPS for 2011.
F: They do not disclose shared issued or outstanding or earnings per share.
- Have the companies reported any discontinued operations for the last year?
Neither firm reported any discontinued operations for 2011 (neither had any extraordinary items of any kind).
- ...
Education
- BSc, University of Virginia
- MSc, University of Virginia
- PhD, Georgia State University
Recent Feedback
- "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
- "Thank, this is more clear to me now."
- "Awesome job! "
- "ty"
- "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.