Group 3 Nova Cannabis
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University Canada West *
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625
Subject
Finance
Date
Jun 2, 2024
Type
pptx
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17
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Prof. Warren Goldblum
Group 3
Investment Analysis and Management Nova Cannabis Inc.
•
Company Assessment based on its Revenue Model and Value Buds
•
Strategies implication
•
Industry analysis based on provincial consumption and Market analysis of the Company
•
Ratio Analysis - P/E, P/B, P/S, EPS
•
Company Valuation based on DFC Model
•
WACC (Weighted Average Cost of Capital)
•
Risk assessment
•
Key Considerations
•
Recommendation
Executive Summary
Firm Assessment
Business model of Nova Cannabis Inc. •
Nova Cannabis Inc. is operating business as a national retailer of cannabis and the majorly via its Value Buds Banner. Mission: Deliver compelling value to its customers.
Objective: Grow, attract, and retain loyal customers by offering quality cannabis products at lower rates.
Revenue Model: Nova generates revenue from the sale of cannabis products
in the 92 retail store locations in Saskatchewan, Ontario, and Alberta. They generate 70% of its revenue from the “
Value Buds
” banner. They also have $5544 revenue from proprietary licensing in 2022 and a major $220876 from retail sales.
Strategy: They
follow the low-cost strategy model
to maintain their profitability with growth.
Revenue and Profit of Nova Cannabis during 2022 & 2021
Quarterly Revenue and Gross Margin growth of Nova Cannabis
Strong Execution and growth record from October 2018 to May 2023
Trey Research
Cannabis retail industry analysis
The Canadian cannabis market has witnessed a growth trend in double digits since legalization.
Industry facts and figures
•
In 2022, the annual sales of cannabis for non-medical purposes by provincial cannabis authorities and other retail outlets were $4.5 billion.
•
An estimated 68% of cannabis users reported obtaining at least some of the cannabis they consumed from a legal source in 2020, higher than before legalization in 2018 (23%) and just after legalization in 2019 (47%). Growing cannabis, either themselves or by someone else, was a supply source for 14% of consumers in 2020, higher than in 2018 (8%) or 2019 (9%). •
Overall Market Share as per Q4 2023 is 33.4%
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Related Questions
Multiple Choice Questions
1. The following are the factors to be considered in Suitability, except
A. Environment
B. Capabilities
C. Expectations
D. Scenarios
2. The ____________ for a firm is the internal rate of return on existing investments, based on real cash flows.
A. cash flow return on investment (CFROI)
B. Economic Value Added (EVA)
C. Total Shareholders Return
D. Return on Investment
3. The elements that must be considered in using EVA are as follows, except ___________.
A. Reasonableness of earnings
B. Appropriate cost of Capital
C. Volatility of the market
D. None of the above
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TOPIC: Introduction to Financial Management
1. Which of the following can be accepted as main points to note when it comes to a company's financial objective?
O It is generally accepted that the main financial objective of a company should be to maximize (or at least increase) shareholder wealth.
O There are practical difficulties in selecting a suitable measurement for growth in shareholder wealth. Financial targets such as profit maximization and growth in EPS might be used, but no financial target on its own is ideal.
O Financial performance is therefore assessed in a variety of ways: by the actual or expected increase in the share price, growth in profits, growth in EPS, and so on.
2. Which of the following statement/s depicts agency relationships and conflicts?
I. The owners expect the agents to act in the best interests of the owners. Ideally, the 'contract' between the owners and the managers should ensure that the managers always act in the best interests of the…
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Critically explain two of the business capital investment decisions
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The primary goal of financial managers include all of the following EXCEPT :
A. Maximize stockholder wealth.
B. Maximizing firm value
C. Challenge legislation in states where the company operates
D. Minimizing WACC
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Discussion Thread: Valuation Factors.
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Select one:
a. capital structure of the enterprise
b. liquidity and financial flexibility of the enterprise
c. efficiency with which enterprise assets are used
d. net realizable value of enterprise assets
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Select one:
O a. maximize stockholder wealth
O b. maximize dividend payments
Oc minimize expenses
O d. satisfaction of suppliers
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A statement of financial position allows investors to assess all of the following except the___.
WHICH OPTION IS CORRECT?
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answer these question
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The DuPont framework for financial statement analysis of a business focuses on the areas of Profitability, Efficiency and Leverage.
True or False
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FINANCE2A
First Question
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which one is correct answer?
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a.
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b.
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Il and III
II, II and IV
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- I want Answer of this Questionarrow_forwardCritically explain two of the business capital investment decisions According to the ratio critically analyze how they are related to their long-term business strategy and the contribution to their economic sustainability by creating value.arrow_forwardQuestion:1) You are expected and required to comment/analyze specifically the following aspects on These three Companies Artistic Denim Mills Ltd, Faisal Spinning Millis Ltd. And the Feroze 1888 Mills Ltd.i) Chosen companies leverage.ii) Debt management.iii) DuPont variants i.e., profitability, asset efficiency, and leverage.4) Also draw strength from market intelligence, if, you have or are able to obtain about the chosen companies(s) and is worth explanation. Such information typically may include major expansion project initiated during the last two yearsarrow_forward
- The primary goal of financial managers include all of the following EXCEPT : A. Maximize stockholder wealth. B. Maximizing firm value C. Challenge legislation in states where the company operates D. Minimizing WACCarrow_forwardDiscussion Thread: Valuation Factors. discuss the factors that lead to a valuation of a company’s worth compared to that of the financial statements and how company executives create the most value for all stakeholders.arrow_forwardA statement of financial position allows investors to assess all of the following except the___. Select one: a. capital structure of the enterprise b. liquidity and financial flexibility of the enterprise c. efficiency with which enterprise assets are used d. net realizable value of enterprise assetsarrow_forward
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Cornerstones of Financial Accounting
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