Metro INC Project Report PDF

Preview

Summary

Download Metro INC Project Report PDF

Description

ASSIGNMENT ON THE COMAPANY

METRO INC COMPANY

SUBMISSION TO: ADAM PROKOP SUBMISSION BY: MANPREET KAUR BHULLAR STUDENT ID: 217623851 SUBJECT: ACCOUNTING

METRO

INC.

METRO INC. is a Canadian food retailer, operating in the provinces of Quebec and Ontario. The company is based in Montreal, Quebec with head office at 11011 Boulevard Maurice – Duple sis. Metro is the third largest grocery store in Canada after Loblaw’s and Sobeys. Metro inc. was founded in 1947 in the province of Quebec by Rolland Juneau. Metro operates as a retailer, distributor, franchisor and manufacturer in the food and pharmaceutical sectors in Canada. It operates food stores including supermarkets and discount stores that provide fresh food and grocery products, baked goods, prepared foods, meats, general merchandise, non-perishable goods, dairy products, fruits and vegetables, frozen food, and deli products as well as Mediterranean and Middle-Eastern products, drug stores and pharmacies.

COMPITION REVIEW: Metro has many competitors such as Loblaw’s Inc, Sobeys and Wal-Mart, however Metro’s financial reports are still very well, there mission to “exceed our customer’s expectations every day to earn their long term loyalty” and that is exactly what they do, Metro has many niches which differentiates them such as having 24 hour stores, they also have a roadmap which help them deal with evolving environment. They already have 2016-2020 plans which allow them to align their efforts, prioritize their actions and make real progress. They also touch the lives of their customers and keep close to the community by contributing to several fundraising campaigns and donating to food banks. The whole grocery market in Canada is dominating by Loblaw’s, Empire and

Metro and together they account for approximately 50%of Canada’s total market share (Vincent , Allion, Florescu & Steckly 2017). In recent years there has been increasing competition from large discounters such as Wal-Mart. It is very challenging, intense environment, said Metro Chief Executive Eric La Fleche, adding that discounting has increased as mass merchants add more volume. Stores continue to open and, market by market, that has a domino effect where people react. Wal-Mart is spending close to $500 million this year to upgrade and expand its network in Canada, adding nine new stores and putting new grocery space in existing stores. Target, whose fresh food is supplied by Sobeys, is opening 124 Canadian outlets this year while Loblaw’s is vying to takeover Shoppers Drug mart Corp. in an attempt to boost its offering. Metro’s new sales grow more than15% in its first full quarter since acquiring the Jean Coutu Group Pharmacy chain. Metro’s biggest advantage amongst its competitors is by operating under numerous company names. This allows metro to touch upon different market segments generating a larger customer pool and service specific clientely for example, pharmaceuticals. Aside from its low price competitive a good buyer- seller relationship with its multiple suppliers. This allows that metro is reliable in terms of its credit and company reputation. Overall there the financial situation of metro is very well and they are smart as they plan ahead to make sure they are always doing something new to keep aligned with any new things in the market and to rise over their competitors.

DESCRIPTION OF THE WHOLE INDUSTRY: Metro Inc is a Canada based food and pharmaceutical company operated a network of approximately 950 food stores under various banners including Metro, Metro plus, Super-C, Food Basics, Adonis, as well as 650 drug stores primarily under the Jean

Coutu, Brunet, Metro Pharmacy, and Food b Basics Pharmacy banners. It also manufactures generic drugs and provides online grocery shopping services. The company serves restaurants, other chains, non franchised drugstores and various health centers as well as consumers. There are some strengths of the company: 

Metro Inc has a very wide range of products including food, pharmaceutical, beauty and health products with different banners.



More than 90,000 dedicated skilled workforce.



High level of commitment of their team members and the quality of training programs.

RATIO REVIEW:  PROFITABILITY RATIOS: Profitability ratios are financial metrics used by analysts and investors to measure and evaluate the ability of the company to generate income relative to revenue, balance sheet assets, operating costs and shareholder equity during a specific period of time. A higher profitability ratio is desired and demonstrates a healthy performing company. There are two categories of profitability ratio are: 1. MARGIN RATIOS: Margin ratios represent ability to convert sales into profit at various cost levels, including gross, operating and margin. 

GROSS PROFIT MARGIN: Gross profit margin compares gross profit to sales revenue. This shows how much a company is earning, taking into account the needed costs to produce its goods and services. In 2016 and 2017 the gross

profit margin ratios were 19.68 and 19.70. The gross profit margin ratios in the year 2018 and 2019 were 19.65 and 19.85. 

OPERATING PROFIT MARGIN: It looks at earning as a percentage of sales before interest expense and income taxes are deduced. In 2016 and 2017 the operating margin was 5.85 and 5.86. And in 2017 and 2018 the operating margins were 5.70 and 6.35.



PROFIT MARGIN: This ratio indicate a company’s ability to effectively control operating expense and shows how interest expense and income tax expense have affected the company’s net income. In 2016 and 2017 the PM ratios were 0.57 and 0.59 and in 2018 and 2019 the PM ratios were 1.72 and 0.71.

2. RETURN RATIOS: Which represent the ability to generate returns for shareholders. 

RETURN ON EQUITY: It measures the level of income attributed to shareholders against the investment that shareholders put into the firm. The ratios were 21.47, 21.16, 40.13 and 12.27 for the last four years.



RETURN ON ASSETS: This ratio is calculated as net income divided by total assets. It is a measure of how efficiently a firm utilizes its assets. ROA in 2016 and 2017 was 10.40 and 10.15 and in 2018 and 2019 the ratios were 20.83 and 6.47.

 LIQUIDITY RATIOS: Liquidity ratios are the ratios that measure a company’s ability to meet its currently maturing debts or obligations. The liquidity ratios are: 

CASH RATIO: Cash ratio is the ratio of cash equivalents of a company to its liabilities. It measures the ability of a company to repay its current liabilities by

only using its cash and cash equivalents. Metro Inc has the ratios of years 2016 to 2019 were 0.03, 0.12, 0.13, and 0.15 that means the company has increased its cash equivalents which has improved the cash ratio. 

CURRENT RATIO: Current ratio measures the ability of a company to cover its short term liabilities with its assets. The formula is current assets divided by current liabilities. The current ratios of the years 2016-2019 were $1.12, $1.08, $1.17 and $1.11.



QUICK RATIO: The Quick ratio compares quick assets, defined as cash and noncash assets, to current liabilities. Quick assets include cash, short term investments, and accounts receivable. The quick ratios of the years 2016 to 2019 were 0.34, 0.39, 0.50 and 0.51. The quick ratio of metro inc. has shown a positive trend.

 EFFICIENCY RATIOS: Efficiency ratios measure how well company utilizes their assets to generate income. Efficiency ratios are used to assess the level of efficiency that a company has achieved through their operations. 

INVENTORY TURNOVER: This ratio is used to determine if sales are enough to turn or use the inventory. Inventory turnover ratios for the years of 2016 to 2019 were 12.44, 12.56, 11.51 and 11.99.



ASSETS TURNOVER: A high assets turnover ratio means the company uses its assets efficiently, where a low ratio means its assets are being used inefficiently. In the years of 2016 to 2019 the assets turnover ratios were 2.34, 2.33, 1.66 and 1.51.

 GROWTH RATIOS: Growth ratios are the measure of growth of a company.



REVENUE: Revenue growth is a type of growth that can identify a trend in a company’s revenue and is used to assess how well they are achieving their strategic objectives. Metro inc. has the ratios of years 2016 to 2019 were 12787.9, 13175.3, 14383.4, and 16767.5.



NET INCOME: Net income defines company’s income after all expenses. The net income in the years of 2016 to 2019 was 435.99, 481.88, 1316.94, and 537.42.



EARNINGS PER SHARE: It defines the portion of a company’s profit that designated to each individual share of the stock. The ratios of earnings per shares of 2016 to 2019 were 2.41, 2.59, 2.72, and 2.78.

 SOLVENCY RATIOS: Solvency ratio is a key metric used to measure company‘s ability to meet its debt and other obligations. 

DEBT TO EQUITY: This ratio is the ratio of total liabilities of a company to its shareholder’s equity. Debt to equity ratios for the years of 2016 o 2019 were 0.47, 0.50, 0.47, 0.45.



DEBT TO ASSETS: Debt to assets ratio measures the degree to which a company’s assets are financed by debt. The debt to assets ratios for the years of 2016 to 2019 were 0.22, 0.24, 0.24, 0.24.

OVERALL PERFORMANCE AND FUTURE POTENTIAL: From the last four years Metro Inc. has performed well overall. Metro has greater profitability and efficiency growth and the company indicated a good results on debt obligations using their quick and cash equivalents. Metro announced results for the past year which were impressive. The acquisition of Jean Coutu leads massive potential for Metro. Many investments will enable Metro to even better meet the expectations of its

current and future customers and to continue its growth. Metro’s ability to recover in the following years is promising of a positive future potential.

INVESTOR VIEW: Improved overall and same store sales have lead to a 45% gain for investors. That includes a 25.6% jump in earnings for the company during the most recent quarter. Investment is based on many factors like investor should consider the profile of the company, future prospects, and history of revenue growth, return on equity. The analysis of the Metro Inc.’s ratios best informs this investment decision. Metro Inc. has defined positive results in sales and profit ratios in last years. This shows impressive results in revenue growth, profit margins, cash ratios, current ratios and debt to assets and debt to equity.

CREDITOR VIEW: The creditors should always evaluate the business properly before lending large loans. The bank and the creditors should measure the history of the company and its profile of ratios. It includes cash, current and quick ratios. They should evaluate the company’s history of currents ratios to determine the ability of the company to cover its short term assets. Metro Inc. also be viewed as an ideal borrower of its quick ratio which measures quick assets and short term investments. The quick ratios increase from last few years. The creditors must measure the solvency ratio which shows the company’s ability to pay back debt in different scenarios. The status of the ratios, support the decision to lend money to Metro Inc.

GRAPHS OF PROFITABILITY, EFFICIENCY, SOLVENCY, LIQUIDITY, AND GROWTH RATIOS:

25

45 40

20 GROSSMARGIN NET MARGIN OPERATING MARGIN PROFIT MARGIN

15 10 5 0

35 30 25

ROA ROE

20 15 10 5 0 2016

2017

2018

2019

2019 INVENTORY TURNOVR ASSET TURNOVER

2018 2017 2016 0

2

4

6

8 10 12 14

0.6 0.5 0.4 DEBT TO ASSETS DEBT TO EQUITY DEBT TO REVENUE

0.3 0.2 0.1 0 2016

2017

2018

2019

1.4 1.2 1 0.8 CASH RATIO CURRENT RATIO QUICK RATIO

0.6 0.4 0.2 0 2016

2017

2018

2019

9000 8000 7000 6000 5000 Axis Title

4000 3000 2000 1000 0

EARNINGS PER SHARE Axis Title

REFERENCES:

NET INCOME

 https: //corpo.metro.ca/en/about-us.html

 http//www.Investopedia.com/terms/r/returnonequity.asp  Metro, Inc.-Grocery.com” www. Grocery.com. Archived from the original on 201708-22. Retrieved 2018-01-18  A b c d e “metro 2019 Annual Report.” Metro Corporate Financial Assets.  http://canada.fandom.com  http://www.statista.com...