RONA Inc. (www.rona.ca), founded in 1939, is Canada's leading distributor and retailer of hardware, home improvement, and gardening products. It has a network that exceeds 600 stores across Canada. Its sales grew from \(\$ 478\) million in 1993 to \(\$ 4,677\) million in 2009 . 1ts financial Required:
1. Examine RONA's balance sheets. Why did the company's assets increase significantly in 2009 ? Which sections of the annual reports would include information that helps the reader answer this question? Which assets show the largest increases, and how did the company finance the increase in these assets?
2. Compute and interpret the debt-to-equity ratios for 2008 and 2009.
3. RONA's current assets include a Prepaid expenses account with a balance of \(\$ 18,114\). What does this account represent, and what type of transactions would cause an increase or a decrease in the account balance? Explain.
4. RONA's income statement does not include information related to cost of sales and general, selling, and administrative expenses. Why did the company exclude such details from its income statement? Explain.
5. Compute the total asset turnover ratio, return on assets, return on equity, and net profit margin for both years 2008 and 2009. Comment on the profitability of RONA's operations in both years. RONA's total assets and shareholders' equity at December 31,2007 , amounted to \(\$ 2,482,446\) and \(\$ 1,325,206\), respectively.
6. RONA's operations generated significant amounts of cash during both the years 2008 and 2009 . The company also made significant investments in 2009 . How did the company finance these investments?
7. Compute and interpret the quality of earnings ratio for both 2008 and 2009:"
8. Access one of the online information services listed in the chapter, search for RONA Inc. (RON.TO) and look for analyst estimates. What is the average analysts' estimate of RONA's earnings per share (EPS) for the next two years? Do analysts expect RONA's EPS to increase or decrease in the future? What information did the analysts take into consideration in computing their EPS estimates for the next two years?

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Assets Current assets Cash Trada race vables (Note 10) income taxes receivable nventory (Mole 5) Prepaid expenses RONA Inc. Consolidated Balance Sheets December 28, 2009 and December 30, 2008 (in thousands of dollars) Derivative financial instrumerts (Note 23) Future income taxes (Nata 7) Investments (Note 113 Fixed assets (Note 12; Fixed assets help for sale (Note 13) Goodwi Intangible assets (Note 14) 3her assets (Nute 15) Future incarne taxes Mute 7) Liabilities Current abilities Bank loans (Noto 16) 2009 2008 $ 239,257 $ 12,345 250,845 234,027 2,436 720,262 6,475 763,239 18.114 11,202 B01 1,089 15.914 19,274 1,253,829 1,047,651 1,978 10,180 868,359 822,375 -3,749 34,870 155,572 454,889 82,828 57,056 22,682 27,210 27,593 24,681 $2,749.883 S 2,478,918 S 5,211 Trade payable and accrued liabilities 427.817 Denvative financial instruments (Plote 23) Future income taxes (Note 7) Installments or long-term debl (Nuls 17) 176 4.200 9,996 448,700 $3,468 122,318 2,180 4.461 15,696 453 123