Refer to the financial statements of Canadian Tire Corporation (Appendix A) and RONA Inc. (on Connect), and the Industry Ratio Report (Appendix B on Connect).
1. What title does each company give its statement of earnings? Explain what the term “consolidated” means.
2. Which company had higher net earnings at the end of its fiscal year?
3. Compute the total asset turnover ratio and the return on assets for each company for the most recent year. Which company is utilizing assets more effectively to generate sales and net earnings? Explain.
4. Compare the total asset turnover ratio and the return on assets for both companies to the industry average. On average, are these two companies utilizing assets to generate sales and net earnings better or worse than their competitors?
5. How much cash was provided by operating activities by each company during the most recent year? What was the percentage change in operating cash flows for each company during the most recent year?
6. How much did each company pay in income taxes during the last fiscal year reported in the financial statements? Where did you find this information?
7. What segments does Canadian Tire report in the notes to its financial statements? What does RONA report about segments?