• Background – History and Overview of Industry
•History and Overview of Canadian Pacific Railway
•History and Overview of Canadian National Railway
2. GAAP methods validation
3. Financial Analysis
•Canadian Pacific Railway
•Canadian National Railway
4. Comparison of Canadian Pacific Railway and Canadian National Railway through Ratio Analysis •Gross margin
•Net income margin,
•Return on assets
•Return on equity
•Cash flow Statement
A. Railway Industry in North America
Rail industry is profitable and growing industry. In North America, five companies are dominant and each one has its own advantage. 1.Canadian National Railway- It covers continent north-south, east-west. 2.Canadian Pacific Rail-Bulk commodities (coal, grains, and fertilizers) compromises approximately 44% of revenue 3.CSX- Provides service to east part of the Mississippi River and it is one of the biggest exporter of coal to Southeast Asia, India, and Germany. 4.Union Pacific- This company provides service to west of the Mississippi River and import exports at U.S. West Coast ports. 5.Norfolk Southern- The primary strength of this company is Coal business considered it exports coal from U.S. East Coast ports.
Among these all big players, Canadian National Railway and Canadian Pacific Rail are considered as competitors. The financial analysis of the same is performed to assess the profitability from investor’s view-point. Among these all big players, Canadian National Railway and Canadian Pacific Rail were considered as competitors in several areas, mainly in Central Canada before the automobile age and before the development of dense highway network in Ontario and Quebec Among these all big players, Canadian National Railway and Canadian Pacific Rail were considered as competitors in several areas, mainly in Central Canada before the automobile age and before the development of dense highway network in Ontario and Quebec. The financial analysis of the same is performed to assess the profitability from investor’s view-point in following pages. B. Canadian Pacific railway
Also knows as CP Rail between 1968 and 1996, Canadian Pacific Railway (CPR)founded in 1881 .Its headquarter is in Calgary, Alberta and it owns approximately 15,300 miles of rail route across Canada and US. CPR considers that they helped Canada to be one united country and they are nation builders by connecting various provinces. Its network extends from Port Metro Vancouver on Canada’s Pacific Coast to the Port of Montreal in eastern Canada, and to the United industrial centers of Chicago; Detroit, Michigan; Newark, New Jersey; Philadelphia; New York City and Buffalo, New York; Kansas City, Missouri, and Minneapolis, Minnesota. Through its subsidiaries, CPR transports merchandise freight, bulk commodities and intermodal traffic. It transports bulk commodities like grain, coal, sulphur and fertilizers; merchandise freight like finished vehicles and automotive parts, forest and industrial and consumer products. High-value, time-sensitive retail goods are transported by Intermodal traffic. From October 2001, its listed on New York Stock Exchange and the Toronto Stock Exchange. The company has 6.5 billion(USD) market capitalization. This company was listed among Canada’s Top 100 Employers by Mediacorp Canada Inc in 2008. Two American lines viz. Dakota, Minnesota and Eastern Railroad and Iowa, Chicago and Eastern Railroad were acquired by the company in 2009. Following are the subsidiaries of CPR-
1.Dakota, Minnesota & Eastern Railroad
2.Delaware & Hudson Railway
3.Soo Line Railroad Co.
C. The Canadian National Railway Company
The Canadian National Railways (CNR) was created by union of several bankrupt companies by federal government of Canada along with some railway companies which were already owned...