Refer to the financial statements and the accompanying notes of Canadian Tire Corporation in Appendix A.

Required

1. State the amount of the largest expense on the statement of earnings for 2012 and describe the transaction represented by the expense.

2. Assuming that all net sales are on credit, how much cash did Canadian Tire Corporation collect from customers?

3. A shareholder has complained that “more dividends should be paid because the company had net earnings of $ 499.2 million in 2012. Since this amount is all cash, more of it should go to the shareholders.” Explain why the shareholder’s assumption that net earnings equal net cash inflow is not valid. If you believe that the assumption is valid, state so and support your position concisely.

4. Describe and contrast the purpose of a statement of earnings versus a statement of financial position.

5. Compute the company’s total asset turnover ratio and its return on assets for 2012. Explain their meaning.