Financial Statement Analysis – Case Study 1
Based on “North West Company: Analyzing Financial Performance” case, answer the following questions
1. What is different about remote food retail markets compared to mainstream food retail markets?
2(i) Calculate the following for NWC for the year 2014: [4 marks]
a. Revenue growth (%)
b. Cost growth (%)
c. Cost as a percentage of sales (%)
d. Return on sales (%)
e. Earnings growth (%)
f. Return on equity (%)
g. Current ratio
h. Debt-equity ratio
(ii) Explain the financial performance NWC in terms of “profitability” indicators from 2 (i).
3. Compare the Revenue cost and margin analysis, Profitability and Solvency (See Exhibit 4) of NWC with that of Loblaw and industry average (You need to tabulate the results). Explain the performance
of NWC relative to peer firm and industry. [4 marks]
4. How does the firm’s domestic performance compare to its international performance? [Your
answered should be backed by some numerical analysis]. [2 marks]
5. Using data in Exhibit 2, conduct a common size analysis for year 2014 and 2015. Explain the findings
from your analysis. [4 marks]
6. Should the investment fund company continue evaluating NWC as a potential investment? Justify
your answer. [3 marks]
PART: B [This question is NOT related to “North West Company: Analyzing Financial Performance”]
Many non-tangible assets are not reported on the balance sheet apart from in specific circumstances. Explain how this may result in the published balance sheet for Apple (http://investor.apple.com/financials.cfm) not reflecting the true financial position of the business.