Individual assignment #1

Please refer to Bombardier’s 2019 report (fiscal year ending (FYE) Dec 31 2019). Based on information in the annual report, please calculate the following:

Univariate ratio analysis (as discussed in class): for 2019 (FYE Dec 31 2019)

Summary profitability and asset turnover ratios

Gross margin, accounts receivables turnover, inventory turnover, and PP&E turnover ratios

Solvency ratios (including leverage and coverage ratios)

Liquidity ratios

Interpret the ratios calculated above

Multivariate analysis – for 2019 (FYE Dec 31 2019) only.

Analysis based on Altman Z score (original model)

Probability of default based on Ohlson O score

Provide an interpretation of the above scores

Overall assessment – (i) Based on your quantitative analysis and interpretation, would you be concerned about Bombardier’s ability to continue operating as a going concern? Explain why (or why not). (ii) Compare your assessment with the external auditor’s (E&Y’s) assessment in its audit report. (iii) Reconcile your inferences with the fact that Bombardier’s stock (TSE: BBD.B) increased more than three-fold in 2021 (i.e., from ~CAD 0.5 to ~CAD 1.7 per share).

Note:

Please show your calculations and state your assumptions clearly. If you use an alternative data source (such as Factset or CapitalIQ), please cite that source clearly.

For qualitative discussions, bullet points are OK. Long essays not needed.

Please use US price level index for computing the Ohlson O Score.

Additional information:

Market Capitalization for FY ending 2019 = CAD 4,025.6 mill.

Market Capitalization on FY ending 2018 = CAD 5,972.9 mill.