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Dollarama Company Case

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1) What is Dollarama’s largest current asset? Elaborate on what this has to do with their operations. Dollarama’s largest current asset is merchandise inventory. Current assets are items owned by an entity can be converted into cash within one year. Merchandise inventory is an extremely important part of this company as it is intended for sale to its customers. Dollarama’s operations are based on the annual sale of the merchandise. Dollarama is a retail store whose main source of income is by the sales to the customers of their merchandise. This is why it is expected to convert into cash within one year. Dollarama’s business is adjusted according to the sales of the merchandise. 2) What is Dollarama’s largest non-current asset? What are …show more content…

Non-current assets are items owned by an entity that cannot be converted into cash within one year. Goodwill is the value of the company’s reputation, location, and brand. Goodwill is an intangible asset. It appears on the balance sheet when a company buys another and pays more for the company’s intangible assets than tangible assets. There are three sources of goodwill of Dollarama Inc. One is the knowledge and business insight. The expertise of workplace and the value of human resource is included under the goodwill factor of the balance sheet. Another is the reputation of the product and brand equity and loyalty. Dollarama is a household name which generates positivity and intern is a factor that is valuable to boost the profit of the company. The last sourse is the economic environment of the company. This is the measurement of the levels of investor confidence which influences the value of a firm in the …show more content…

The inventory was sold and replaced 5.49 times in the year of 2013. This ratio is high. This means that the demand for the Dollarama’s products is high. This indicates that Dollarama Inc.’s performance in the fiscal year of 2013 is high. 5) Discuss the debt to equity ratio and what it says about how Dollarama finances its operations? The debt to ratio is a ratio that compares a firms total liabilities and shareholders’ equity. It shows the proportion of the amount of money invested by the business owners as well as external entities. Debt to Equity Ratio = Total Liabilities/Shareholders’ Equity = $80,994/$931,490 = 0.087 The debt to equity ratio of Dollarama Inc. for the year of 2013 is 0.087. The debt to equity ratio is lower than one which means that the debt is less than the owner’s equity. The business is geared in the positive direction. The risk factor of the external lenders and investors of the company is less. Dollarama has a strong financial interest in the business than other external lenders. Dollarama operates by using less of the exteral lenders money and more of its own to run the

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