Profitability

LOBLAWS METRO
PROFITABILITY & RETURN RATIOS
2019 2020 2021 2019 2020 2021
Gross Profit Margin 30.7% 30.3% 31.5% 20% 20% 20%
Profit (net income) margin 2.3% 2.1% 3.5% 4% 4% 5%
Return on Assets (ROA) 4.9% 4.5% 6.2% 7% 7% 7%
Return on Equity (ROE) 9.2% 9.8% 16.3% 12% 13% 13%
NOPAT $1,63,57,32,108 $1,64,09,56,254 $2,26,11,13,022 $ 78,58,26,248.45 $ 89,37,67,628.88 $ 91,98,85,473.36

Tax rate 0.26 0.27 0.19 0.26 0.27 0.26

Solvency
LOBLAWS METRO
SOLVENCY RATIOS
2019 2020 2021 2019 2020 2021
Total Debt Ratio 0.69 0.69 0.68 Total Debt/Total Assets 0.46 0.54 0.53
Debt-to-Equity Ratio 2.21 2.23 2.12 Total Debt/Total Equity 0.86 1.18 1.12
Equity Multiplier 3.21 3.23 3.12 Total Assets/Total Equity 1.86 2.18 2.12

Liquidity
LOBLAWS
LIQUIDITY RATIO
2019 2020 2021
Current Ratio 0.45 0.47 0.51 Current assets/current liabilities
Cash Ratio 0.022 0.035 0.034 Cash/Current liabilities
Working Capital $2,08,30,00,000 $2,79,20,00,000 $3,44,10,00,000 Current assets - Current Liabilities
METRO

2019 2020 2021

Current Ratio 1.11 1.34 1.12 Current assets/current liabilities
Cash Ratio 0.15 0.24 0.20 Cash/Current liabilities
Working Capital $ 21,07,00,000.00 $ 64,04,00,000.00 $ 26,86,00,000.00 Current assets - Current Liabilities

Efficiency
LOBLAWS
ACTIVITY/EFFICIENCY RATIOS
2019 2020 2021
Inventory Turnover 13.01 16.12 19.40 COGS/Avg. Inventory
Days Sales in inventory 28.1 22.6 18.8 365/inventory turnover
Receivables Turnover 10.01 10.49 11.32 Sales/Avg. Accounts Receivable
Days Sales in Receivables 36.48 34.80 32.24 365/AR Turnover
Total Asset Turnover 1.41 1.29 1.33 Sales/Average Total Assets

METRO
ACTIVITY/EFFICIENCY RATIOS
2019 2020 2021
Inventory Turnover 12.08 12.04 12.00 COGS/Avg. Inventory
Days Sales in inventory 30.2 30.3 30.4 365/inventory turnover
Receivables Turnover 29.18 28.73 27.68 Sales/Avg. Accounts Receivable
Days Sales in Receivables 12.51 12.71 13.19 365/AR Turnover
Total Asset Turnover 1.52 1.47 1.35 Sales/Average Total Assets
  One ratio from each category (profitability, solvency, efficiency, liquidity) should be compared to a key
competitor or industry average. For example, you could take the profit margin of Pepsi and compare it to the
profit margin of its competitor Coke, and comment on the trends.

 Visualizations of key ratios from each category.

You should include the calculations for ratios for your selected company but you are not required or will be marked
for ratios from competitors (you can get those online from financial databases such as Morningstar, Yahoo Finance, or
Google Finance).

This section should be 3 to 4 pages, including graphs and calculations which can be included here or as exhibits.

Profitability

LOBLAWS
Profit (net
Gross Profit income) Return on Return on Tax
Margin margin Assets (ROA) Equity (ROE) NOPAT rate
2019 30.7% 2.3% 4.9% 9.2% $1,63,57,32,108 0.26
2020 30.3% 2.1% 4.5% 9.8% $1,64,09,56,254 0.27
2021 31.5% 3.5% 6.2% 16.3% $2,26,11,13,022 0.19

Profitability ratios measure a company's ability to generate profits from its operations. Here are ratios explaining the
same:

Gross Profit Margin:

Loblaw's gross profit margin remained relatively stable over the three-year period, ranging from 30.3% in 2020 to
31.5% in 2021. This indicates that the company is able to effectively manage its cost of goods sold and maintain a
reasonable profit margin on its products.

Profit (Net Income) Margin:

Profit (net income) margin

4.0%

3.5% The net income margin shows the company's ability to generate profits
3.0%
after accounting for all expenses. Loblaw's net income margin
2.5%

2.0%
increased from 2.3% in 2019 to 3.5% in 2021. This indicates that the
1.5% company has been able to improve its profitability over time,
1.0% generating a higher percentage of net income for each dollar of
0.5%
revenue.
0.0%
2019 2020 2021

Return on Assets (ROA):

Return on Assets (ROA)

7.0%

6.0%

5.0%
Loblaw's ROA demonstrates the efficiency of its asset utilization
4.0%
to generate profits. The company's ROA increased from 4.9% in
3.0% 2019 to 6.2% in 2021. This indicates that Loblaw has been able to
2.0% generate higher returns on its assets, reflecting improved
1.0% operational efficiency or effective capital allocation.
0.0%
2019 2020 2021

Return on Equity (ROE):

 Return on Equity (ROE)
18.0%

16.0% The return on equity measures the return generated for

14.0%
shareholders' investments. Loblaw's ROE increased significantly from
12.0%

10.0%
9.2% in 2019 to 16.3% in 2021. This suggests that the company has
8.0% been successful in maximizing returns for its shareholders, either
6.0%
through improved profitability or more efficient capital structure.
4.0%

2.0%

0.0%
2019 2020 2021

Liquidity

LOBLAWS
LIQUIDITY
RATIO
Current Ratio Cash Ratio Working Capital
2019 0.45 0.022 $2,08,30,00,000
2020 0.47 0.035 $2,79,20,00,000
2021 0.51 0.034 $3,44,10,00,000

Current Ratio:

Current Ratio
0.52

The current ratio measures the company's ability to cover its short-term
0.51

0.50

0.49

0.48
liabilities with its short-term assets. Loblaw's current ratio increased from
0.47 0.45 in 2019 to 0.51 in 2021. This indicates an improvement in the
company's short-term liquidity position. However, it's important to note
0.46

0.45

0.44

0.43
that a current ratio below 1 may suggest potential difficulties in meeting
0.42
2019 2020 2021 short-term obligations.

Cash Ratio:

Cash Ratio
0.040

0.035 The cash ratio represents the proportion of a company's cash and
0.030
cash equivalents to its current liabilities. Loblaw's cash ratio ranged
from 0.022 in 2019 to 0.034 in 2021. This shows that the company
0.025

0.020

0.015
had a relatively low level of cash reserves compared to its current
0.010 liabilities. A higher cash ratio indicates a stronger ability to cover
0.005 short-term obligations with readily available cash.
-
2019 2020 2021

Working Capital:

Working Capital
$4,000,000,000

$3,500,000,000 Working capital represents the difference between a company's

$3,000,000,000 current assets and current liabilities. Loblaw's working capital
$2,500,000,000
increased over the three-year period, from $2,08,30,00,000 in 2019
to $3,44,10,00,000 in 2021. This indicates an increase in the
$2,000,000,000

$1,500,000,000

$1,000,000,000
company's ability to meet its short-term obligations and potentially
$500,000,000
invest in growth opportunities.
$0
2019 2020 2021
Solvency

SOLVENCY RATIOS
Total Debt Debt-to-Equity Equity
Ratio Ratio Multiplier
2019 0.69 2.21 3.21
2020 0.69 2.23 3.23
2021 0.68 2.12 3.12

Total Debt Ratio:

Total Debt Ratio

0.70

The total debt ratio measures the proportion of a company's

assets that are financed by debt. Loblaw's total debt ratio
0.68 remained relatively stable over the three-year period,
ranging from 0.68 in 2021 to 0.69 in 2019 and 2020. This
indicates that the company's assets are primarily financed
0.66
2019 2020 2021
by a combination of debt and equity.

Debt-to-Equity Ratio:

The debt-to-equity ratio compares a company's total debt to its

Debt-to-Equity Ratio
2.24

2.22
shareholders' equity. Loblaw's debt-to-equity ratio decreased from
2.20 2.21 in 2019 to 2.12 in 2021, indicating a reduction in the
2.18

2.16
proportion of debt relative to equity financing. A lower debt-to-
2.14 equity ratio suggests a lower level of financial leverage and
2.12
potentially less financial risk.
2.10

2.08

2.06
2019 2020 2021

Equity Multiplier:

Equity Multiplier

3.24 The equity multiplier is another measure of financial

3.22
3.20
leverage, calculated by dividing total assets by
3.18 shareholders' equity. Loblaw's equity multiplier remained
3.16
3.14
relatively stable over the three-year period, ranging from
3.12 3.12 in 2021 to 3.21 in 2019 and 2020. The equity
3.10
multiplier indicates the extent to which a company relies
3.08
3.06
2019 2020 2021
on debt to finance its assets.
Efficiency ratios

EFFICIENCY RATIOS
Inventory Days Sales in Receivables Days Sales in Total Asset
Turnover inventory Turnover Receivables Turnover

2019 13.01 28.1 10.01 36.48 1.41

2020 16.12 22.6 10.49 34.80 1.29

2021 19.40 18.8 11.32 32.24 1.33

Inventory Turnover:

Inventory Turnover

25.00
The inventory turnover ratio measures how efficiently a company
manages its inventory by indicating the number of times inventory
20.00
is sold and replaced during a given period. Loblaw's inventory
15.00
turnover ratio increased from 13.01 in 2019 to 19.40 in 2021. This
10.00
suggests that the company has improved its inventory
5.00
management efficiency, selling its inventory at a faster rate.
-
2019 2020 2021

Receivables Turnover:

Receivables Turnover

11.50
The receivables turnover ratio measures the
11.00 number of times a company collects its
10.50
accounts receivable during a given period.
10.00

9.50
Loblaw's receivables turnover ratio remained
9.00
2019 2020 2021 relatively stable over the three-year period,
ranging from 10.01 in 2019 to 11.32 in 2021.
This suggests that the company has
maintained a consistent pace in collecting its accounts receivable.

Days Sales in Receivables:

Days Sales in Receivables

Days sales in receivables represents the average

37.00
36.00
35.00
number of days it takes for a company to collect its
34.00
33.00
accounts receivable. Loblaw's days sales in
32.00
31.00
receivables decreased from 36.48 days in 2019 to
30.00
2019 2020
32.24 days in 2021. This indicates that the company
2021

has been able to improve its efficiency in collecting

receivables, reducing the average time it takes to convert receivables into cash.
Metro comparison

Profitability

METRO
Gross Profit Profit (net Return on Return on Equity Tax
Margin income) margin Assets (ROA) (ROE) NOPAT rate
$
2019 19.85% 4.24% 7.15% 12.24% 78,58,26,248.45 0.26
$
2020 19.90% 4.42% 7.30% 13.12% 89,37,67,628.88 0.27
$
2021 19.99% 4.50% 6.81% 13.10% 91,98,85,473.36 0.26

Return on Assets (ROA)

Profit (net income) margin

7.40%
7.30%
4.55%
4.50% 7.20%
4.45% 7.10%
4.40% 7.00%
4.35% 6.90%
4.30%
6.80%
4.25%
6.70%
4.20%
6.60%
4.15%
4.10%
6.50%
2019 2020 2021 2019 2020 2021

Return on Equity (ROE)

13.20%

13.00%

12.80%

12.60%

12.40%

12.20%

12.00%

11.80%
2019 2020 2021

Liquidity

Current Ratio Cash Ratio Working Capital

$21,07,00,000.0
2019 1.11 0.15 0

$64,04,00,000.0
2020 1.34 0.24 0

$26,86,00,000.0
2021 1.12 0.20 0
 Current Ratio
Cash Ratio
1.60
0.25
1.40

1.20 0.20

1.00
0.15
0.80

0.60 0.10

0.40
0.05
0.20

0.00 0.00
2019 2020 2021 2019 2020 2021

Working Capital
$700,000,000.00

$600,000,000.00

$500,000,000.00

$400,000,000.00

$300,000,000.00

$200,000,000.00

$100,000,000.00

$-
2019 2020 2021

Solvency

Total Debt Debt-to-Equity

Ratio Ratio Equity Multiplier
2019 0.46 0.86 1.86
2020 0.54 1.18 2.18
2021 0.53 1.12 2.12

Debt-to-Equity Ratio
Total Debt Ratio

0.56
1.40
0.54
1.20

0.52 1.00

0.80
0.50
0.60
0.48
0.40

0.46 0.20

0.00
0.44 2019 2020 2021

0.42
2019 2020 2021

Equity Multiplier
2.30

2.20

2.10

2.00

1.90

1.80

1.70

1.60
2019 2020 2021

Efficiency

Inventory Days Sales in Receivables Days Sales in Total Asset

Turnover inventory Turnover Receivables Turnover

2019 12.08 30.2 29.18 12.51 1.52

2020 12.04 30.3 28.73 12.71 1.47

2021 12.00 30.4 27.68 13.19 1.35

 Inventory Turnover
12.10

12.08

12.06

12.04

12.02

12.00

11.98

11.96
2019 2020 2021

Days Sales in inventory

30.5

30.4

30.3

30.2

30.1
2019 2020 2021

Receivables Turnover
29.50

29.00

28.50

28.00

27.50

27.00

26.50
2019 2020 2021
 Days Sales in Receivables
13.40

13.20

13.00

12.80

12.60

12.40

12.20

12.00
2019 2020 2021

Total Asset Turnover

1.55

1.50

1.45

1.40

1.35

1.30

1.25
2019 2020 2021