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Annual Report As an employee with the Toronto Dominion Bank I must decide whether or not I would arrange loans to my clients Some of my clients range from medium to large corporations Canadian Tire which is one of my largest client and one of the largest corporations in Canada has recently approached me on arranging both long-term and short-term financing Canadian Tire has also provided me with their 2000 Annual Report to support their loan application To decide my decision to arrange a loan to Canadian Tire I must look into their annual report thoroughly In order to justify my decision I must evaluate Canadian Tires financial statements based on there liquidity leverage and profitability of the company When arranging a loan to Canadian Tire I must consider the liquidity of the company Liquidity is the analysis of the companys solvency It measures Canadian Tires ability to pay their debts as they come due The current ratio is a measurement of the companys ability to pay short-term debts At the beginning of the year 2000 Canadian Tires current ratio was 132 to 1 At the end of the year the current ratio was 136 to 1 The current ratio improved very slightly up only by 004 because cash grew by a small percentage during the year The cash growth results from the issuance of Class A Non-Voting Shares in 2000 have also contributed to the improvement of the current ratio Although the current ratio does not meet the expectations of a 2 to 1 standard the company is still able to pay off their short term debts slowly The accounts receivable turnover counts the number of times per year the AR has been converted into cash Canadian Tires AR turnover has improved from the start of 2000 with a number of 587 times to 626 at the end of the year The number 626 times will be the number of times the AR will
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