The statements of cash flows for RONA Inc. are presented in Exhibit 5-21. (RONA operates approximately 700 stores of various sizes and formats across Canada and is the largest Canadian distributor and retailer of hardware, renovation, and gardening products.)
Examine the company's financing activities during the period 2008-2009. What general trends do you observe? What effect would these financing activities have on the proportion of RONA's total financing that is provided by debt (funds borrowed from creditors) versus that provided by equity (funds invested by owners)? What does this tell you about how the company's level of financial risk changed over the two years? What are some of the possible future implications of this?