Question

Reading and Interpreting 12-4 a1, bi, ci, d Cineplex Inc. is the largest movie exhibition company in Canada. It operates theatres in 10 provinces across Canada. The company's financial statements are presented in Exhibits 12.13A to 12.13C. EXHIBIT 12.13A Cineplex Inc.'s 2016 Consolidated Balance Sheets CINEPLEX INC. Consolidated Balance Sheets (expressed in thousands of Canadian dollars) December 31, 2016 December 31, 2015 $ $ Assets Current assets Cash and cash equivalents (note 3) Trade and other receivables (note 4) Income taxes receivable (note 7) Inventories (note 5) Prepaid expenses and other current assets 35,713 121,398 33,553 115,903 463 21,412 10,856 182,187 19,691 10,025 186,827 533,192 6,517 Non-current assets Property, equipment and leaseholds (note 6) Deferred income taxes (note 7) Fair value of interest rate swap agreements (note 29) Interests in joint ventures (note 8) Intangible assets (note 9) Goodwill (note 10) 564,879 5,891 756 35,487 125,492 813,494 $1,728,186 35,288 132,140 807,953 $1,701,917 Business acquisitions (note 2) Commitments guarantees and contingencies (note 28) Liabilities Current liabilities Accounts payable and accrued liabilities (note 11) Share-based compensation (note 12) Dividends payable (note 13) Income taxes payable (note 7) Deferred revenue Current debt (note 14) Finance lease obligations (note 15) Fair value of interest rate swap agreements (note 29) $ 204,725 8,958 8,575 2,042 172,140 $ 209,657 9,742 8,238 30,464 159,568 3,737 2,957 1,414 425,777 3,180 2,419 402,039 continued

Answer 1

		2016	2015
Accounts Receivable turnover	Net Credit Sales/ Average Accounts Receivable	12.46	11.29
Average Collection Period	(Average Accounts receivable/Net Credit Sales) * 365	29.3	0.3
Inventory turnover	Cost of goods sold/average inventory	23.63	23.85
Days to Sell inventory	Ending Inventory/Cost of Goods Sold *365	16.1	15.3
Accounts Payable turnover	Total Credit Purchases/ Average Accounts Payable	2.35	2.33
Accounts Payable Payment Period	Trade Payable/Credit Purchases * 365	153.3	156.4
Current ratio	Current Asset/ Current Liability	0.45	0.44
Quick ratio	Quick Asset/ Current Liability	0.40	0.39
Debt/equity ratio	Total Liabilities/Total Equity	1.30	1.21
Interest Coverage ratio	Income before Interest&Tax / Interest Expense	6.8	8.6
Based on Debt to equity and interest coverage ratio the financial risk on the company has increased in 2016		Because Debt to equity ratio increased and interest coverage ratio decreased
Profit Margin	Net Income/ Net Sales *100	42.8%	71.9%
Return on Equity	Net Income/ Average Shareholders’ Equity *100	10.3%	17.5%
Return on Assets	Net Income/ Average Total Assets*100	4.5%	7.9%
Net Free Cash flow	(net cash provided by operating activities)	166014	230594
	(See Cash flow statement)
	Net free cash flow has decreased in 2016

	2016	2015
Net (Credit) Sales (total revenue)	1478326	13,70,943
Average Accounts Receivable (opening+closing)/2	118650.5	1,21,398
Cost of goods sold (film cost+cost of food service))	485661	469633
Ending Inventory	21412	19,691
Average inventory (opening+closing)/2	20551.5	19,691
Total Credit Purchases (see below)	487382	489324
Trade Payable	204725	$ 2,09,657
Average Accounts Payable (opening+closing)/2	207191	$ 2,09,657
Current Asset	182187	186827
Current Liability	402039	425777
Quick Asset (current asset-inventories)	160775	1,67,136
Total Liabilities	976291	9,29,420
Total Shareholders’ Equity	7,49,095	7,67,473
Income before Interest&Tax (109318+18816), (171168+22443)	128134	193611
Interest Expense	18816	22443
Net Income	77991	1,34,249
Average Total Assets (opening+closing)/2	1715051.5	$ 17,01,917
Average Shareholders’ Equity (opening+closing)/2	758284	7,67,473
Total (Credit) Purchases
Opening Inventory	-19691	(since not provided)
Cost of goods sold during the year	485661	469633
Closing inventory	21412	19,691
Total (Credit) Purchases	487382	489324

Hope you understood. Thank you.