ANNUAL REPORT INTRODUCTORY ACTIVITY – PREPARATION FOR CULMINATING

Name of Corporation: Canadian tire Corporation Limited

Stock symbol:CTC

Website Address: https://www.canadiantire.ca/en.html

Nature of Business: Retail

Main Competitors: Rona, Lowe’s Home Depot, Walmart

Recent news: Diluted Earnings Per Share (EPS) was $2.47; normalized diluted EPS grew $2.70 compared to the
first quarter of 2020

A written description of the corporation's history, products, locations, and ownership structure.
Canadian tire Corporation is one of Canada’s largest retail chains. It was founded in Toronto by brothers J.W
and A.J Billes and was originally called Hamilton Tire and garage in 1922. The name was Later changed to Canadian
Tire corporation in 1927. The bought the business for 1800. During this time Canada had the largest car ownership
per capita In the world.
They are a retail store and sell Automotive, sports, leisure and home products. Canadian Tire works
diligently to assure product safety for customers. This is one through proactive product quality management
processes and working with suppliers to deliver products that are safe, with operating manuals that enable safe
operation and use. The company has a quality assurance team that works with merchandising groups to improve
product quality to extend its life and improve processes that report and act on customer feedback about product
quality
The company is still headquartered in Toronto and operates a network of 1700 stores and gas bars that
extend to every province and territory except Nunavut.
Ownership structure: Canadian tire corporation limited owns: Canadian tire services limited, Canadian tire
real estate limited, FGL sports Ltd, Mark’s Work Wearhouse Ltd and Helly Hansen Holding. Canadian tire service
limited is over CTFS Holdings limited which is over Canadian Tire Bank. Canadian Tire Real estate Limited owns CT
Real Estate investment Trust.

Canadian Tire’s 504 stores, including approximately 5,620 automotive service bays, are operated by independent
third parties, known as Associate Dealers (“Dealers”). Each Dealer owns the fixtures, equipment and inventory of the
store they operate, employs the store staff and is responsible for the store’s operating expenses.

Auditor's report. In a brief paragraph state its purpose and summarize the one given for your corporation.
An auditor’s report is a document containing the auditor’s opinion on whether the company’s financial
statements comply with GAAP and are free from material misstatement. It is important because banks, creditors, and
regulators require an audit of a companies financial statement. The board of director of Canadian Tire Corporation
has established the Audit Committee for responsibilities in respect to: the integrity of the financial statements and
related disclosures, compliance with legal and other requirements related to the financial statements, the
qualifications, independence and appointment of external auditors, the performance of external and internal audit
services, the corporation risk management processes and such other matters delegated by the board
Letter to Shareholders. State its purpose and summarize the one given in your report.
The Purpose of the letter to the shareholders is both to inform shareholders of company performance and to convince
them that the corporation is doing a good job and has strong prospects for growth. In this letter, Maureen J, Sabia,
chairman of the board mentions how its been a very tough year due to covid but they have had strong results which
shows how resilient they are. They have worked with management on opportunities to grow the company. The
Company was able to move with agility and purpose, implementing swift operational changes as circumstances
changed. She also mentions how in a matter of weeks they ramped up their eCommerce to unprecedented levels.
The chief executive officer, Greg Hicks also mentions how this time gave them the opportunity to reshape the culture
of their community and are striving to always make things perfect. He mentions the Triangle credit card and how the
eCommerce grew to $1.6Billion which is a 183% percent increase.

Briefly answer the following short questions:

1. What is the fiscal period for your corporation's report?

52 weeks end December 31 2021

2. When and where is the annual meeting for shareholders?

Typically held in May and is a virtual-only meeting via audio webcast and teleconference
This year: May 13 2021

3. Who are the auditors of the report?

the Audit Committee is comprised of Diana Chant (Chairman), Pierre Boivin, David Court, James Goodfellow and
Norman Jaskolka

4. What major financial statements are provided?

Consolidated statements of income, consolidated balance sheet, consolidated statements of comprehensive income,
consolidated statement of cash flows, consolidated statements of changes in equity.

5. What is the share symbol as shown on the TSE?

CTC.A

Last year end that has annual report available:

2020

Stock 52 week high: 213.85

Stock 52 week low: 114.67

Current ratio for last 2 years:

2021- 2.03
2020- 1.94
 Working capital for last 2 years:
2021- 87.84
2020- 89.36

Analysis:
Overall Canadian Tire is a very well growing retail business. Throughout the year they made multiple
operation adjustments in order to fulfill their customers needs and following new Covid laws. Providing services and
try to oversee their major competitor retail companies. Over the past year, their retail sales grew 11%. They have also
achieved a 15.7% growth in their normalized retail income before tax. In 2020 the first two quarters were significantly
impacted by the pandemic, their team drove outstanding results in the second two quarters. With this type of
resilience as well as looking at their financial statements and financial data, Canadian Tire appears to be a fast
growing retail corporation which will continue to grow for many years to come.

RATIO FORMULA CALCULATION SIGNIFICANCE PAG

millions($) E
NUM
BER

Working capital Current assets- current 6794.1- 1906.3 Measures short-term 122
liabilities debt paying ability, a
=4887.7 higher result is
desired

Current ratio Current assets/current liabilities 6794.1/1906.3 Measures short term 122
debt paying ability. A
=3.56 higher result is
desired

Acid test Cash+short term investments 1327.2+643.0+ 6008.6/ 1906.3 Measures 40,18
accounts + accounts receivable/ = immediate-short term ,122
current liabilities
paying abilities

Receivables turnover Net credit sales/ average 14871.0/6008.6 Measures liquidity of 18

gross accounts receivable receivables
=2.47

Collection period Days in a year/ receivables 365/ Measures number of

turnover days receivables are
outstanding

Inventory turnover Cost of goods Measures liquidity of

sold/average inventory inventory

Days sales inventory Days in a year/ inventory 365/ Measures number of

turnover days inventory is on
hand
-lower
Operating cycle Days sales in inventory + Measures number of
collection period days to purchase
inventory, sell it on
account,and
collected the cash

- lower

Debt to total assets Total liabilities/ total assets 14542.4/20377.1 Measures 81

=0.71 percentage of total
assets provided by
creditors. - this
percent is high when
it is desired to be low

Interest coverage Profit interest expense on Measures ability to

income tax expense(EBIT)/ meet interest
interest expense payments

Free cash flow Cash provided(used) by 2442.8- 848.0 Measures cash 41

operating activities- cash available operating
used(provided) by =1594.8 activities that
investing activities management can use
after paying capital
expenditures
- This result is
higher which
is desired

Gross profit margin Gross profit/ net sales 5076.6/ 15172.7 Measures amount of 23,18
profit generated by
Gross profit= revenue- =0.33 each dollar of sales
cost of producing revenue -

Net sales= gross sales-

returns- allowances-
discounts

Profit margin profit/ net sales 11270.8/ Measures of

efficiently assets are
used to generate
sales

Asset turnover Net sales/ average total 15172.7/20377.1 Measures the overall
assets profitability of
=0.74 shareholders
investments

Return on assets profit/ average total assets 11270.8/20377.1 measures amount of 24

profit earned on each
=0.55 common share
Return on equity profit/average 11270.8/ 4499.1 Measures profitability 81
shareholders equity = of shareholders
investment
=2.50

Earnings per share Profit - preferred dividends/ Measures amount of

weighted average number profit earned for each
of common shares common share

Price earnings ratio Market price per share/ Measures

earnings per share relationship between
market price per
share and earnings
per share

Payout ratio Cash dividends/ profit 4.5875/ Measures 18

percentage of profit
distributed as cash
dividends
profit= total revenue- total expenses
14871.0-3600.8

Financial analysis
Overall, Canadian Tire appears to be in a strong financial position. They have made a lot of
growth over the past few years and seem to continue to grow. In terms of their stock, that has
been growing for years and continues to grow. They have many strategies such as the risk
management strategy that include plans and investments to protect its brand. With this being
said, there was a pandemic in 2020 which might have slightly affected the stores profit due to
lockdown for the majority of the year. When looking at the working capital and current ratio, we
can see that they both have high results which is desired because it shows that they have a
short term debt paying ability which is highly beneficial to the company’s financial position.
Although when looking at the debt to total assets, we can see that that number is fairly high
which is not good. In addition, their profitability this year does not seem to be great when
comparing it to 2019. It can be argued that this was due to the pandemic which had a major
impact on many companies profitability. In future years, although they might have has a slight
setback in terms of their financial position, they have many innovation strategies in the future
which will enhance their profitability and financial performance.