Table of Contents Background 1 IFRS Analysis 1 Note Disclosures: 1 IAS 2: Inventory 1 IAS 16: Property, Plant and Equipment 2 IAS 18: Revenue 3 IAS 38: Intangible Assets 5 IAS 40: Investment Property 5 IFRS Choices 7 Investment Analysis 9 Nature of the industry 9 SWOT Analysis 12 PEST Analysis 12 Critical Success Factors 13 Financial Analysis 14 Recommendation 15 Appendix 1: Consolidated Statement of Earnings 16 Appendix 2: Consolidated Balance Sheets 17 Appendix 3: Note 15 - PP&E 18 Appendix: 4Note 17 - Intangible Assets 19 Appendix 5: Note 15 – Investment Property 20
Shoppers Drug Mart was founded in 1962 by Toronto Pharmacist Murray Koffler. It is a full service retail drug mart which operates under the names Shoppers Drug Mart or Pharmaprix in Québec. Shopper Drug Mart consists of more than 1200 retail locations across Canada. These stores are owned and operated by licensed Associate-owners. The company also owns or licenses more than 57 medical clinic pharmacies which are known by the name Shoppers Simply Pharmacy (Pharmaprix Simplement Santè in Québec). The company also owns and operates 63 Shoppers Home Health Care stores, which are used in the sale and service of assisted-living devices, medical equipment, home-care products and durable mobility equipment. The financial statements of Shoppers Drug Mart were audited by Deloitte and Touche.
Shoppers Drug Mart has a yearend that is the Saturday closest to December 31. This can create either a 52 or 53 week Fiscal year. Shoppers Drug Mart had sales of 10.5 billion dollars in fiscal 2011 and recorded net income of 613 million dollars. This represents a 2.6% growth in sales and a 3.7% growth in net income over fiscal 2010. The company holds assets of 7.3 billion dollars and has total liabilities of around 3 billion dollars.
All values disclosed henceforth are in thousands of Canadian dollars unless otherwise specified.
IAS 2: Inventory
Inventory is comprised of merchandise inventory, which includes prescription inventory, and is valued at the lower of cost and estimated net realizable value. Cost is determined on the first-in, first-out basis. Cost includes all direct expenditures and other appropriate costs incurred in bringing inventory to its present location and condition. The Company classifies rebates and other consideration received from a vendor as a reduction to the cost of inventory unless the rebate relates to the reimbursement of a selling cost or a payment for services. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated selling expenses.
During the current financial year, the Company recorded $39,943 (2010: $37,884) as an expense for the write-down of inventory as a result of net realizable value being lower than cost in cost of goods sold in the consolidated statements of earnings.
During the financial years ended December 31, 2011 and January 1, 2011, the Company did not reverse any significant inventory write-downs recognized in previous years.
As per the disclosure requirements set forth in IAS 2 the company is required to disclose: * The accounting policies adopted to measure inventories, as well as the cost formula used * The carrying amount in any classifications relevant to the company * The carrying amount of the inventories carried at fair value less costs to sell * Amount of inventories recognized as an expense * The amount of any write downs * The amount of any reversals and the circumstances that led to their reversal * Carrying amount of any inventories pledged as security
As seen through note 3(k) the company has appropriately disclosed that their inventories are carried at the lower of cost and net realizable value. It is also shown that they utilize the cost formula…