Financial Analysis of the Canadian Furniture Industry

The study deals with the revenue and cost structure of the Canadian furniture industry. The profitability is compared to alternative investments, and we ask whether company owners earn an adequate return. The study continues to analyze the industry's financial health. Ratios concerning debt and equity, liquidity, short term capital employment (receivables, inventory) are presented in numerous tables. Finally, financing sources (banks, leasing, debentures) are discussed, indicating their advantages and disadvantages. Our findings are segregated by industry segment, company size, and region.
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1. REVENUE, COSTS AND PROFITS 1

1.1. Revenue 2
1.2. Costs 6
1.3. The Rate of Return 9

2. THE FINANCIAL STRUCTURE 13

2.1. Debt and Equity 14
2.2. Liquidity 16

3. SHORT TERM CAPITAL EMPLOYMENT 21

3.1. Accounts Receivable 22
3.2. Inventory 24

4. SOURCES OF FINANCE 27
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Exhibit 1: Furniture manufacturing shipments in millions of current
and constant 2005 dollars, 1995 to 2005. 3

Exhibit 2: The total number of establishments, dollar volume of
shipments and average volume of shipments per establishment
in the Canadian furniture industry, 2003. 4

Exhibit 3: The average volume of shipments per establishment
in the Canadian furniture industry, 2003. 5

Exhibit 4: Furniture manufacturers’ major costs as a percent
share of total shipments, 2003. 7

Exhibit 5: Furniture manufacturers’ major costs by furniture
producer type, 2003. 9

Exhibit 6: Pre-tax profits as a rate of return on total assets
for furniture manufacturers and all manufacturers from 1994 to 2004. 10

Exhibit 7: Pre-tax profits margins for furniture manufacturers and all
manufacturers from 1994 to 2004. 11

Exhibit 8: Ratio of liabilities to assets for furniture manufacturers
and all manufacturers from 1994 to 2004. 15

Exhibit 9: The current ratio for furniture manufacturers and all
manufacturers from 1994 to 2004. 17

Exhibit 10: Interest coverage ratio for furniture manufacturers and
all manufacturers from 1994 to 2004. 18

Exhibit 11: The quick ratio for furniture manufacturers and all
manufacturers from 1994 to 2004. 19

Exhibit 12: Receivable turnover rate for furniture manufacturers
and all manufacturers from 1994 to 2004. 23

Exhibit 13: The inventory to shipments ratio in furniture
manufacturing and all manufacturing from 1994 to 2004. 26

Exhibit 14: Equity and borrowing from affiliates as a percent share
of equity plus liabilities for furniture manufacturers and all
manufacturers from 1994 to 2004. 28

Exhibit 15: Accounts payable as a percent share of equity plus liabilities
for furniture manufacturers and all manufacturers from 1994 to 2004. 29

Exhibit 16: Loans and overdrafts from banks and others as a
percent share of equity plus liabilities for furniture manufacturers
and all manufacturers from 1994 to 2004. 30

Exhibit 17: Bond, debenture and mortgage financing as a
percent share of equity plus liabilities for furniture manufacturers and
all manufacturers from 1994 to 2004.
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