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Compute the rate of return on assets for each firm

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Question - Below is financial information for two different retailing companies: Company A and Company B. Using the information provided answer the questions below.

Selected Data for Company A and Company B (both are retailers) (amounts in millions)

 

Company A

Company B

Sales

$4,076

$278

Cost of Goods Sold

1,686

97

Interest Expense

0

0

Net Income

268

22

Average Inventory

303

4

Average Fixed Assets

2,163

130

Average Total Assets

2,472

166

Required - Compute the rate of return on assets for each firm. Disaggregate the rate of return on assets into profit margin and assets turnover components. The income tax rate is 35%.

Reference no: EM133053147

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