CANADA CORPORATION LIMITED

Canada Corporation Limited

Canada Corporation Limited

Introduction

Canada Corporation is Canada's leading supplier of plastic materials company; with one of the best know brands in the country. They offer a full range of services and compete in all supplier of plastic materialss markets throughout Australia, providing more than 10.3 million Australian plastic materials and more than 6.5 million mobile services.

Canada Corporation is the descendant of a merger of Plastic materials Australia, the government-owned monopoly plastic materials carrier, Canada Corporation was partially privatised by the coalition government in the late 1990s, but it is still 51% owned by the government.

Based on their business mission statement and goal, Canada Corporation kept a stable development in supplies sof plastic materials services industry with continuing a revenue growth for the past 10 years, however, When we step further into analyzing, we know that face the uncertain risk, Canada Corporation is not so far strong as before, here, we would try to find out the answers through analysis on its financial statements for the latest two to three years.

FINANCIAL ANALYSIS

Table of Absolutes & Ratio Analysis

Financial Highlights (In GBP as of 02/28/2009)

Total Revenue

54,327,000,000

EBITDA

3,506,000,000

Operating Income

2,970,000,000

Net Income

2,161,000,000

Total Assets

46,053,000,000

Current Assets

14,045,000,000

Total Liabilities

33,058,000,000

Current Liabilities

18,040,000,000

Long Term Debt

12,391,000,000

Stockholders' Equity

12,995,000,000

Canada Corporation Ltd. Balance Sheet December 31, 2009

Assets

Liabilities and Shareholders' Equity

Cash

Accounts receivable

Inventory

Fixed assets, net

Excess over book

value of assets

acquired

Total assets

$1,000,000

5,000,000

7,000,000

15,000,0002,000,000

$30,000,000

Notes payable

Accounts payable

Accrued wages & taxes

Long-term debt

Preferred stock

Common stock

Retained earnings

Total liabilities & equity

$ 4,000,000

2,000,000

2,000,000

12,000,000

4,000,000

2,000,000

4,000,000

$30,000,000

Canada Corporation Ltd. Statement of Income and Retained Earnings Year Ended December 31, 2009

Net Sales:

Credit

Cash

Total

Costs and expenses:

Cost of goods sold

Selling, general, & administration expenses

Depreciation

Interest on long-term debt

Net income before taxes

Taxes on income

Net income after taxes

Less: Dividends on preferred stock

Net income available to common stock

Add: Retained earnings at 1/1/73

Subtotal

Less: Dividends paid on common stock

Retained earnings at 12/31/73

$12,000,000

2,000,000

1,400,000

600,000

$16,000,000

4,000,000

$20,000,000

16,000,000

4,000,000

2,000,000

2,000,000

240,000

1,760,000

2,600,000

4,360,000

-360,000

$4,000,000

FINANCIAL RATIOS

ROCE %

16.67

operating profit margin %

3.99

sales to capital employed

418.06

total asset turnover

1.03

stock turnover in days

19.44

debtors turnover in days

52.62

creditors turnover in days

190.77

opearating cash cycle

-118.71

 

 

LIQUIDITY RATIOS

liquidity ratio

0.78

quick ratio

0.63

 

 

SOLVENCY RATIOS

gearing

0.54

debt to equity %

1.16

 

 

SHAREHOLDER RATIOS

return on equity %

0.17

earnings per share %

0.27

dividend yield

9

dividend cover

0.0026

price earning ratio

0.37

earnings yield

2.702703

The gross profit has reduced slightly because the company offered majority of its products at cheaper rate to promote its sales. With sales revenue increasing because of this manufacturering strategy, the ratio is bound to be lower. However the gross profit has also shown an increase due to the increased sales which is understandable as they have a direct relationship. But the increase in revenue is more than the increase in gross profit thus shifting the balance towards the denominator.

When analyzed also with net profit, net profit has also shown a decline. Net profit has marginally decreased over the year. This marginal difference could be attributed to an increase in administrative expenses, increased taxes due to new taxation policy guidelines and finance costs (Interest paid). Similar to gross profit, the increase in revenue surpasses the increase in net profits and hence the ratio has shown a decline. However it can be presumed that the new sales strategy would help in not only increase the sales in the future but also ...