What conclusions can you draw from (b) regarding the margin of protection to the creditors?

RONA inc a major competitor in the home improvement business


RONA, inc., a major competitor in the home improvement business, operates more than 600 stores in Canada. For the years ended December 25, 2011, and December 26, 2010, RONA reported the following statement of financial position data (in millions):

a. Determine the total equity as at December 25, 2011 and December 26, 2010.

b. Determine the debt ratios for 2011 and 2010. Round the percentages to one decimal place.

c. What conclusions can you draw from (b) regarding the margin of protection to the creditors?

d. Using the balance sheet data for Canadian Tire Corporation from Exercise 17-18, how does RONA’s debt ratio compare with that of Canadian Tire?

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