Sears Canada is one of the biggest Canadian department store retailers. It operates a large number of department stores that sell home" fashions, appliances, apparel, home electronics, and garden products. It also sells merchandise online. Selected information about the company's resources and operations are presented on the following page (amounts in millions of dollars).

Required:
1. Compute the net profit margin and the return on equity for 2005 to 2008.
2. Both ratios are relatively high in 2005 compared to later years. What are the most likely reasons for the significant increase in both ratios? (Hint: Think about the reasons for an increase in profit and a decrease in shareholders' equity.)
3. As a potential investor, how do you interpret these ratios?
4. What additional information would you require before deciding whether or not to invest in Sears' shares?

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2008 2007 2006 2005 2004 Total shareholders' equity $1,508 $1,093 $ 785 $ 645 $1,877 Total revenue 5,733 6,326 5,933 6,238 6,230 Net earnings (Profit) 289 306 153 771 129