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).

Required:

1. What was the cost of sales for each company’s most recent fiscal year? Where did you find the information?

2. Compute the percentage of cost of sales to sales for each company if possible. Compute the same ratio for the previous two fiscal years and comment on the results.

3. Compute each company’s net profit margin ratio for the years shown in its annual report. What do your results suggest about each company over the two- year period?

4. Compute each company’s return on equity for the most recent year. Which company is more profitable? Explain.

5. Compare each company’s net profit margin ratio and return on equity for the most recent year to the industry averages for both ratios in the Industry Ratio Report. Were these two companies performing better or worse than the average company in the industry?