PART 3 - Product and Service

Cineplex offers several products and services. The services produced include the Box

Office, Film Entertainment and Content, Theatre Food Services and Theatre Exhibition. Other

services include the hospitality and digital commerce and digital media and amusement

(Rumokoy & Sumampouw,2018). Box Office is the primary distribution channel for new films

and the core business of Cineplex. Cineplex has 169 theatres with 1683 screens and over 70M

annual patrons. Food Service provides a variety of food options for patrons to enhance their

theater experience. Cineplex is constantly working to improve its concession service in a variety

of ways. The term "media" refers to two distinct types of content: first, cinematic media that

includes advertising, and second, digital-based media (Rabbi, M. D. (2017). Advertising revenue

is generated across the board at Cineplex. P1AG, The Rec Room, Playdium, TopGolf and

various eSports activities are all part of the Amusement and Leisure category. The foods served

at the in-theatre include the beverages.

They are located in 94 Cineplex theaters, some replacing previous restaurant partners and

others opening new locations. Comparatively, VIP Cinemas and some Xscape locations have a

licensed lounge with better wares. Poptopia is a full-service popcorn restaurant with 22 locations.

Other Cineplex theaters may have Poptopia, but only in caramel or kettle corn flavors.

First to offer ice cream at Cineplex were Baskin-Robbins and TCBY. Favored partner

since December 2007: Yogen Früz on January 1, 2014, Cineplex acquired 50% of Yoyo's Yogurt

Café. As of January 2017, Yoyo's restaurants were available in 77 Cineplex locations, Yogen

Fruz in 23 and TCBY in 16. Cineplex Queensway and VIP introduced Melt Sweet Creations, an

in-house dessert boutique brand for women aged 19 to 35. Melt is spread across 13 locations.
 Cold and hot beverages are available. The Coca-Cola line replaced the Pepsi line at

Famous Players. Coca-Cola Freestyle is sold in 12 stores. Starbucks has 105 locations that serve

Pike Place Roast coffee (regular or decaf) and Tazo tea. Some locations serve premium drinks

like caffè mocha and caramel macchiato. Tim Hortons is a full-service restaurant in five

locations, with only one serving both Tim Hortons and Starbucks. In most Cineplex theaters in

Ontario, guests aged 19 and up can purchase alcohol, but only from a selection of beer or cider.

The presence and quality of products offered by the Cineplex makes the favorite in Canadian

market (Zaman, T. (2018).

The Loyalty Program uses a generic strategy to differentiate its product offerings from

the competition. As an established brand, the company uses differentiation to reduce competition

(Rabbi, M. D. (2017).). It has expanded its product line to better compete and expand

opportunities within the industry. Customers associate the brand with its distinctive logo.

The low-cost focus strategy serves a niche market segment’s need at the lowest possible

price. While focusing on the product's taste, size, and design to best meet the customers' needs

(Khotimah & Sari, 2016). Cineplex Entertainment constantly revises its branding strategies and

changes product design and packaging. Cineplex Loyalty customers are dissatisfied, despite the

fact that product demand has not decreased. It's evident in online feedback. Cineplex Loyalty

should focus on improving customer purchase and post-purchase experiences (Ho &

Weinberg,2011).

Cineplex Loyalty marketing managers use market segmentation to break down a large

market into smaller segments. It has 68 customer segments based on US Household Purchasing

Preferences data. In addition to geographic and usage factors, Cineplex uses psychographic

factors to segment customers (Ooi & Sim,2007). Cineplex’s has no specific customers. Everyone
who is interested in attending the movies are the customers to the company. The attendees of the

cinemas and the entertaining are the customers who consume the services and products offered

by Cineplex. The customers buy the beverages to take as they enjoy the Movies and acts in the

cinema hall.

PART 4 - Company Ratio and Analysis

a) Cash Assessment

i. Working capital as a percentage of revenue

The difference between current assets and current liabilities is referred to as

"working capital." Assets that will be used within the year and debts that will be paid off

within the year are referred to as current assets and current liabilities. The difference

between current assets and current liabilities provides little information on its own when

compared to other companies as a percentage of sales; however, when compared to other

companies as a percentage of sales, the ratio becomes more relevant and useful.

The Working Capital of CINEPLEX INC is a measure of the company's

efficiency and operating liquidity. It is a key indicator of a company's ability to continue

operating normally without incurring additional debt. Cineplex inc currently has a

working capital of $238.95 million (Fernandes,2020). It is critical to comprehend the

fundamental principles of developing solid financial models for CINEPLEX INC.

Because the main accounts in CINEPLEX INC's financial reports are all linked and

dependent on one another, it's critical to look at all possible correlations between them.

Rather than going through all of CINEPLEX INC's financial statements, investors can

look at the correlated drivers to determine the company's overall health. CINEPLEX INC
 has a Working Capital of according to the company's disclosures (238.95 million). The

company's working capital is 116.17 percent higher than that of all Canada stocks.

ii. Current ratio

The Current Ratio of CINEPLEX INC is calculated by dividing the company's

Current Assets by its Current Liabilities. The ratio is used to evaluate a company's

liquidity. The majority of CINEPLEX INC's fundamental indicators, such as the Current

Ratio, are part of a valuation analysis module that assists investors in locating stocks that

are currently trading at prices that are higher or lower than their true value. When

comparing two companies, however, knowing their current ratio growth rates alone may

not be enough to determine which is a better investment. Acceptable current ratios vary

by industry, but the general rule is that current assets should be at least twice as large as

current liabilities

iii. Quick ratio

The quick ratio is a company's ability to meet short-term obligations using only its

most liquid assets. Total Current Assets minus Total Inventories divided by Total Current

Liabilities is how it's calculated. For the quarter ending in September 2021, Cineplex's

quick ratio was 0.19. Inventories are excluded from current assets, so the quick ratio is

more conservative than the current ratio. High or increasing quick ratio generally

indicates a company is experiencing strong top-line growth and rapidly converting

receivables into cash. The better the company's liquidity position, the higher the quick

ratios. The Cineplex quick ratio is lower as compared to its competitors therefore, it

means Cineplex is struggling to pay its bills as compared to its competitors thus posing

stiff competition in the industry.

iv. Accounts receivable turnover

The Accounts receivable turnover ratio is an efficiency ratio that measures how

efficiently a company collects revenue and uses its assets. Accounts receivable turnover

ratio calculates how many times a company's average accounts receivable is collected

over a given time period. Cineplex Inc. had Receiveable Turnover of 1.25 for the most

recently reported fiscal quarter, ending 2020-09-30.

v. Inventory turnover

Cineplex's Inventory Turnover is a metric that measures how quickly a company's

inventory is turned over in a year. The ability of a company to manage inventory levels is

determined by revenue. It calculates the amount of inventory the company has on hand to

support current levels of revenue.

vi. Payables turnover

Accounts payable turnover is a key measure of a company's ability to pay

suppliers and short-term debts efficiently. Accounts payable turnover indicates how many

times the company's accounts receivables are paid off in a given period, rather than just

how quickly they are paid. For the quarter ending in September 2021, Cineplex's

Accounts Payable totaled $102.7 million. From December 2018 ($96.6m) to December

2019 ($109.7m) and then $33.4m from December 2019 to December 2020 ($33.8m) The

company's annual accounts payable increased from $61m to $74m in March to $102m in

June.

vii. Cash from operations as a percentage of revenue

The operating cash flow margin is a reliable indicator of a company's profitability

and efficiency, as well as the quality of its earnings. A cash flow ratio that measures cash
 from operating activities as a percentage of total sales revenue in a given period is known

as Operating Cash Flow Margin.

b) Profitability Assessment

i) ROE

Net Income attributable to Common Stockholders (Net Income minus dividends

to participating security holders) divided by the average Total Stockholders Equity over a

given period of time yields the ROE percent. For the quarter ending in September 2021,

Cineplex's annualized net income attributable to common stockholders was $-105.9

million. Over the quarter ending in September 2021, Cineplex's average Total

Stockholders’ Equity was $-147.7 million. As a result, Cineplex's annualized ROE

percent for the quarter ending in September 2021 was N/A%.

ii) ROA

The ROA percent is calculated by dividing Net Income by the average Total

Assets over a given time period. For the quarter ending in September 2021, Cineplex's

annualized Net Income was $-105.9 million. Cineplex’s total assets averaged $1,714.4

million in the quarter that ended in September 2021.As a result, Cineplex's annualized

ROA percent for the third quarter of 2021 was -6.18 percent. Cineplex’s highest ROA

percentage in the last 13 years was 9.32 percent. The rate of return on total assets (ROA

%) is calculated as a percentage. It assesses a company's ability to generate profits from

its shareholders' equity and liabilities. For retailers, a return on investment (ROI) of more

than 5% is expected.

iii) Asset turnover

 Asset Turnover measures how quickly a company turns over its asset through

sales. It is calculated as Revenue divided by Total Assets. Therefore, Cineplex's Asset

Turnover for the quarter that ended in Sep. 2021 was 0.12. Asset Turnover is linked to

ROE% through Du Pont Formula. Cineplex’s annualized ROE% for the quarter that

ended in Sep. 2021 was 71.72%. It is also linked to ROA% through Du Pont Formula.

iv) EPS

The net profit of a company is divided by the number of common shares it has

outstanding to calculate earnings per share (EPS).For the three months ending in

September 2021, Cineplex's Earnings per Share (Diluted) was $-0.42.For the trailing

twelve months (TTM) ending in September 2021, earnings per share (diluted) were $-

5.73.For the three months ending in September 2021, Cineplex's EPS without NRI was $-

0.42.Cineplex's highest 3-year average EPS without NRI Growth Rate was 60.40 percent

per year over the last 13 years.

v) Gross profit margin

Gross margin percent is calculated by dividing gross profit by revenue. For the

three months ending in September 2021, Cineplex's gross profit was $133.4 million. As a

result, Cineplex's Gross Margin for the quarter ending in September 2021 was 67.49

percent. Cineplex's highest Gross Margin percent in the last 13 years was 67.42 percent.

Furthermore, the median was 63.78 percent. The gross profit implies durable competitive

advantage.

vi) Operating income margin

The Operating Margin percent is calculated by dividing Operating Income by

Revenue. The revenue of Cineplex for the three months ending in September 2021 was
 $197.6 million, and its operating income was $-5.1 million. The company's Operating

Margin was -2.56 percent for the quarter ended September 2021.

vii) Income before tax margin

The income a company earns before paying income taxes is referred to as pretax

income. Cineplex's highest Pretax Margin in the last 13 years was 14.01 percent. The

average was 7.63 percent. Cineplex had a pretax income of $-26.5 million for the three

months ending in September 2021. Its pretax margin for the same period was -13.40

percent.
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