CIBC Ratio Analysis Sample Assignment

CIBC (Canadian Imperial Bank of Commerce) is a leading financial institution in Canada that provides a wide range of banking and financial services to individuals, businesses, and corporations (CIBC, 2022). Established in 1867, CIBC has over 1,000 branches and over 4,000 ATMs across Canada (CIBC, 2022). The bank offers various products and services, such as personal and business banking, mortgages, loans, credit cards, investment solutions, insurance, and wealth management. CIBC is also recognized as a global financial institution with a presence in the United States, Asia, and Europe (CIBC, 2022). The bank strongly focuses on digital innovation and has invested heavily in technology to enhance the customer experience. In recent years, CIBC has been recognized for its commitment to corporate responsibility, sustainability, diversity, and inclusion (CIBC, 2022). The project entails calculating and analyzing ratios for each ratio category to identify the company’s strengths, weaknesses, opportunities, and threats.

Ratio Analysis

Ratio analysis is a financial analysis technique that involves comparing different financial ratios to evaluate a company’s performance and financial health (Graybeal, Cooper & Franklin, 2019). The ratios can be used to assess a company’s liquidity, profitability, efficiency, and overall financial health.

Debt Utilization Ratios

Solvency Ratios 2021 2020
Debt ratio 0.95 0.95
Debt/equity ratio 17.28 17.62

Debt utilization ratios are financial metrics that measure a company’s use of debt relative to their available credit or income (Graybeal, Cooper & Franklin, 2019). They provide a comprehensive picture of the company’s long-term financial health or solvency. CIBC’s debt ratio remained stable at 0.95, which is significantly high, meaning CIBC uses more debt to finance its operations. The ratio means that for every dollar in assets, CIBC has $0.95 in debts in the two years, meaning almost all of its assets are financed by liabilities. The debt/equity ratio decreased slightly from 17.62 in 2020 to 17.28 in 2021. The debt-to-equity ratio is significantly high, meaning CIBC uses significantly more debt in its operations (Weygandt & Kimmel, 2021). Therefore, CIBC is highly leveraged and hence faces more business risks. CIBC uses more debt, which does not guarantee long-term sustainability.

Profitability Ratios

Profitability ratios 2021 2020
Profit margin 32.21% 20.23%
Return on assets 0.80% 0.49%
Return on equity 14.79% 9.17%

Profitability ratios are financial metrics used to evaluate a company’s ability to generate profits in relation to its sales, assets, and equity (Kimmel et al., 2020). The net profit margin shows an upward trend from 20.23% in 2020 to 32.21% in 2021, which means a rise in revenue generation efficiency. Return on assets measures an entity’s profitability in relation to its total assets (Warren, Reeve & Duchac, 2018). The company’s ROA improved from 0.49% in 2020 to 0.80% in 2021. However, the ratio is significantly low, which shows that CIBC is less effective in using assets to generate a net profit (Weygandt & Kimmel, 2021). Return on equity measures an entity’s profitability in relation to its total shareholders’ equity. The company’s ROE improved from 9.17% in 2020 to 14.79% in 2021. The ratio is relatively high, showing that CIBC is more effective in using equity to generate a net profit.

2021 2020
Net Interest Margin (NIM) 1.37% 1.44%

Net Interest Margin (NIM) is a financial metric used to measure the profitability of a bank or financial institution’s lending activities (Graybeal, Cooper & Franklin, 2019). The NIM decreased from 1.44% in 2020 to 1.37% in 2021. The NIM is low, which indicates that the institution. However, it is positive, which means CIBC is earning more interest income on its assets than it is paying out on its liabilities, which is generally considered a positive indicator of its profitability (Warren, Reeve & Duchac, 2018). NIM is an important metric for banks and other financial institutions because it measures the spread between the interest rates they charge on loans and the interest rates they pay on deposits (Kimmel et al., 2020). The low spread indicates that CIBC is making a relatively low profit on its lending activities and has few funds available to cover its operating expenses and generate earnings for shareholders.

Asset Management Ratios

Asset Management Ratios 2021 2020
Asset turnover 0.024 0.024

Asset management ratios are financial ratios that assess a company’s ability to effectively manage its assets to generate revenue and profit (Scott, 2018). They provide insight into how efficiently a company uses its resources to generate sales and profits. Total asset turnover measures how efficiently an organization can use its assets to generate sales (Warren, Reeve & Duchac, 2018). According to the ratio calculations of CIBC, the total asset turnover remained the same at 0.024. The ratio is significantly low, which means the entity’s efficiency in using its assets to generate sales is low across the period. The low ratio means CIBC generated just $0.024 in revenue in 2020 and 2021 for every dollar in assets.

Market Value Ratios

Market Value Ratios 2021 2020
EPS $13.97 $8.23
P/E ratio 10.27 11.00
M/B ratio 3.32 2.24

Market value ratios are financial ratios used to evaluate a company’s stock price relative to its earnings, sales, assets, and other financial metrics (Kimmel et al., 2020). These ratios are important for investors and analysts to determine a company’s valuation and its potential for future growth. The P/E ratio compares a company’s stock price to its earnings per share. The ratio is used to determine whether a stock is undervalued or overvalued. A high P/E ratio suggests that the stock is overvalued, while a low P/E ratio indicates that the stock may be undervalued (Warren, Reeve & Duchac, 2018). The company’s P/E ratio slightly decreased from 11.00 in 2020 to 10.27 in 2021. However, the high ratio means CIBC is overvalued relative to its peers or the broader market. The P/E ratio is relatively high, meaning investors have high expectations for a company’s growth prospects. EPS shows the company’s financial performance (Weygandt & Kimmel, 2021). The ratio increased from $8.23 in 2020 to $13.97 in 2022, which implies a rise in the company’s profitability. The market-to-book (P/B) ratio compares a company’s stock price to its book value per share (Weygandt & Kimmel, 2021). The ratio determines a company’s value based on its assets. The company’s M/B ratio slightly increased from 2.24 in 2020 to 3.32 in 2021. The ratio is relatively high, suggesting that the stock may be overvalued.

Strengths and Weaknesses

According to CIBC’s financial ratio analysis, the company has weaknesses, opportunities, threats, and strengths. CIBC has a significantly low asset management ratio meaning it cannot effectively manage its liabilities and use the assets to generate more revenues. However, CIBC is profitable in its operations. For instance, its profitability ratios are relatively high, meaning it generates revenues from its operations. Moreover, the long-term solvency ratios of CIBC remained relatively consistent, meaning the company faces significant business risks in its operations. The market value ratios are positive, meaning that the company has a good past and future performance per the market expectations. The P/E ratio is relatively high, meaning investors have high expectations for a company’s growth prospects.

CIBC is highly leveraged and hence faces more business risks as it uses more debts, which does not guarantee long-term sustainability. The profitability ratios are relatively high, showing that CIBC is more effective in using assets and equity to generate a net profit. However, the spread in NIM is low, indicating that CIBC is making a relatively low profit on its lending activities and has few funds available to cover its operating expenses and generate earnings for shareholders. The asset turnover ratio is significantly low, which means the entity’s efficiency in using its assets to generate sales is low across the period.

References

CIBC. (2022). CIBC 2021 Annual Report. https://www.cibc.com/content/dam/about_cibc/investor_relations/pdfs/quarterly_results/2021/ar-21-en.pdf

Graybeal, M., Cooper, P., & Franklin, D. (2019). Principles of accounting volume 1 – financial accounting. 12TH MEDIA SERVICES.

Kimmel P. D. Weygandt J. J. Kieso D. E. Trenholm B. Irvine W. & Burnley C. D. (2020). Financial accounting: Tools for business decision-making (Eighth Canadian). Toronto, ON, Canada: John Wiley & Sons Canada.

Scott P. (2018). Introduction to financial accounting. Oxford: Oxford University Press.

Warren, C. S, Reeve, J. M., & Duchac, J. E. (2018). Financial and managerial accounting. Boston, MA: Cengage Learning.

Weygandt, J. J., & Kimmel, P. D. (2021). Financial & managerial accounting. Hoboken, NJ: Wiley.

Comparison Of Union Grocery On Lillooet And Caribou Streets Essay Example For College

Introduction

Factor rating methods compare two or more items based on certain predetermined criteria, including the store’s location, customer service, product variety and quality, convenience, store layout, price, and promotions (Burt, 2000). The rating method can be used to determine which option is more suitable for our customers. For example, suppose Union Grocery in Lillooet is closer to customers and has a better selection of products than the Caribou Street location. In that case, we may decide it is the more suitable option for our customers. Hence, this method allows businesses to make more informed decisions, as they can identify areas of improvement that can be made to increase customer satisfaction and sales.

Comparison

Lillooet and Caribou Streets are two distinct streets located in the same town. Both Union Grocery stores in these streets offer a variety of food products, but they differ in terms of the type of customers they cater to, their selection of products, and their prices (Burt, 2000). For instance, union Grocery in Lillooet caters to a more affluent customer base, providing higher quality foods and a larger selection of items. This store also charges more for its products, which is their main difference. On the other hand, Caribou Streets has a more basic selection of food items with lower-priced prices. This store caters to a more budget-conscious customer who is looking for basic food items at an affordable price.

On selection, Union Grocery in Lillooet offers a much wider variety of food items than Caribou Streets. They have a wider selection of fresh produce, meats, and dairy products and a greater selection of specialty items. The store also offers a larger selection of organic and healthy food products, an attractive option for health-conscious shoppers (Burt, 2000). On the other hand, Caribou Streets has a much more limited selection of food items, with most items being more basic, such as canned and packaged goods.

Furthermore, in terms of pricing, Union Grocery in Lillooet has higher prices than Caribou Streets. This is due to their higher quality products and the larger selection of items. While the prices may seem high to some, they are often worth it regarding the quality and variety of products available (Xue & Liu, 2022). On the other hand, Caribou Streets has much lower prices, as they offer more basic products at a lower cost.

The key success factors

Union Grocery’s key success factors are its long-term presence in the local community, a wide selection of products, friendly and knowledgeable staff, competitive pricing, and various marketing tactics (Kahaner, 1997). The key success factors for both stores can be broken down into five main categories: location, product selection, customer service, pricing, and marketing.

Location: Union Grocery has been in the same location since its founding, while Caribou Street has been subject to changes in location over the years. Union Grocery benefits from its long-term presence in the local community, whereas Caribou Street has had to work hard to create a presence in the local area.

Product Selection: Union Grocery has a wide selection of products, which reflects the community’s needs, while Caribou Street has a more limited selection that caters to a specific demographic.

Customer Service: Both stores have always provided excellent customer service. They greet each customer with a friendly smile and take the time to answer any questions or concerns. They also offer free delivery for those who cannot make it to the store and have always been willing to go the extra mile to ensure their customers are satisfied.

Pricing: Union Grocery has always been competitively priced, offering its customers the best deals. They stay up-to-date with the market prices and always offer discounts and specials to their loyal customers.

Marketing: Both stores have used various tactics to market their products, including newspaper and radio ads and in-store promotions. However, Union Grocery has also used its long-term presence in the community to its advantage, engaging in community events and sponsoring local sports teams.

What is Facility Location and Factor Rating Importance?

Facility location is determining the best geographical location for a business or facility to operate within. It involves evaluating the advantages and disadvantages of various locations, such as the availability of resources, the cost of land, labor, taxes, and the proximity to suppliers and customers.

The importance of factor rating is to ensure that the selection of a location is based on an objective and quantitative assessment of each location’s strengths and weaknesses. This helps to reduce the risk of making a poor decision based on subjective preferences or biases. Additionally, Xue & Liu (2022) assert that factor rating helps to identify potential opportunities and risks associated with different locations. For example, the availability of resources could be given a rating of 8, while the cost of land could be given a rating of 5. The weight assigned to each factor will depend on the importance of that factor in the decision-making process and vice versa.

Advantages and Disadvantages

Factor rating includes providing an objective assessment of potential locations, creating a better understanding of the strengths and weaknesses of each location, and helping to identify potential opportunities and risks. However, factor rating can be time-consuming and costly. It does not consider the subjective preferences of the decision-maker and only sometimes provides a complete picture of a location’s potential.

Conclusion

In summary, Union Grocery offers a larger selection of products, including fresh produce and a greater variety of grocery items. Both stores offer competitive prices and excellent customer service, making it difficult to choose between them. Ultimately, it comes down to personal preference and desired shopping experience.

References

Burt, S. (2000). The strategic role of retail brands in British grocery retailing. European Journal of marketing, 34(8), 875-890. https://www.emerald.com/insight/content/doi/10.1108/03090560010331351/full/

Kahaner, L. (1997). Competitive intelligence: how to gather, analyze and use information to move your business to the top. Simon and Schuster. https://books.google.com/books?hl=en&lr=&id=K3QfGoGSzmoC&oi=fnd&pg=PA7&dq=Union+Grocerys+key+success+factors+can+be+attributed+to+its+long-term+presence+in+the+local+community,+a+wide+selection+of+products,+friendly+and+knowledgeable+staff,+competitive+pricing,+and+a+variety+of+marketing+tactics.&ots=bbyKjXKEuf&sig=DC5l7I8WYY8C-lcENGKtUn0IudA

Xue, J., & Liu, M. T. (2022). Investigating the live streaming sales from the perspective of the ecosystem: the structures, processes and value flow. Asia Pacific Journal of Marketing and Logistics, (ahead-of-print).

Continuous Professional Development (CPD) Sample Essay

People professionals need to develop, record and reflect on their practice for several reasons. First and foremost, the world of work is constantly evolving, and it is essential to keep up with the latest trends and best practices to remain relevant and effective in their role (CIPD,2022). Secondly, developing, recording, and reflecting on one’s practice is critical to maintaining professional standards and ethics. By actively seeking out new knowledge and skills, professionals can ensure they provide services that align with industry standards and ethical guidelines. This can build trust and credibility with clients and stakeholders, ultimately leading to tremendous success in the field. Finally, recording and reflecting on one’s practice also allows individuals to identify areas of strength and weakness and to create an improvement plan. By reflecting on past experiences, people professionals can gain insights into their performance and develop strategies for improvement. This can lead to better decision-making and problem-solving skills, benefiting the professional and their clients or organization.

One way to approach continuous professional development (CPD) is to identify and prioritize their learning and development needs (The Open University,2021). People professionals can start by reviewing their job responsibilities and identifying areas where they need improvement. This could include knowledge gaps, skills that need refining, or new areas of expertise relevant to their role. Self-assessment tools, such as competency frameworks or 360-degree feedback, can also help identify areas for development. Once needs have been identified, appropriate solutions can be explored. This could include attending training courses, conferences, or workshops, reading relevant literature, seeking mentorship or coaching, or participating in online learning communities. People professionals may also consider pursuing professional certifications or advanced degrees to further their expertise in their field. By taking a proactive approach to their CPD, professionals can stay up-to-date with industry changes, improve their skills and knowledge, and ultimately provide the best possible service to their clients or organization.

Reflecting on my own learning and development activity is also essential. First and foremost, it is crucial for me as a people professional as part of my CPD process as it enables me to evaluate the impact of my learning on my behaviour and practice. Secondly, reflection allows me to identify areas of success and areas for improvement. This identification process can refine my approach to learning and development and make more informed decisions about future activities. Thirdly, reflecting on my learning and development activities increases my motivation by recognizing progress and success. It helps me maintain a sense of accomplishment and progress in my professional development. Lastly, reflection contributes to better learning outcomes by helping me connect my learning to my practice, resulting in more meaningful and effective learning outcomes.

Finally, maintaining professional CPD records is essential for several reasons. First of all, it enables one to meet regulatory requirements by many professional bodies and industry associations (Siddiqui,2022). These organizations require members to maintain records of their CPD activities as part of their membership requirements. Additionally, CPD records can demonstrate ongoing competence and expertise in a particular field, essential for career advancement and professional credibility. Further, CPD records can help professionals identify areas where they need to focus their learning and development efforts, which can help improve their overall performance. Besides, they can also provide evidence of professionalism by demonstrating a commitment to ongoing learning and development, which is vital for building trust and credibility with clients, colleagues, and stakeholders.

In conclusion, continuous professional development (CPD) is essential for people professionals to remain relevant and effective in their roles, maintain professional standards and ethics, and identify areas of strength and weakness for improvement. By prioritizing their learning and development needs and taking a proactive approach to their CPD, professionals can stay up-to-date with industry changes, improve their skills and knowledge, and provide the best possible service to their clients or organization. Reflecting on my learning and development activities is also crucial for me as a people professional, as it enables me to evaluate the impact of my learning on my behaviour and practice, identify areas for improvement, maintain motivation, and connect my learning to my practice. Lastly, maintaining professional CPD records is vital for meeting regulatory requirements, demonstrating ongoing competence and expertise, and building trust and credibility with clients, colleagues, and stakeholders.

References

CIPD. (2022). Continuing Professional Development (CPD). Retrieved from https://www.cipd.co.uk/learn/cpd.

Siddiqui, S. (2022). Importance of Continuing Professional Development (CPD) in Medical Education. International Journal of Medical Students, 10(1), 60–61. https://doi.org/10.5195/ijms.2022.1192

The Open University. (2021). Continuous Professional Development. Retrieved from https://www.open.edu/openlearn/education-development/continuing-professional-development/content-section-0.