Recent annual reports of two fast food chains (Company 1 and Company 2) reveal the following financial information (in millions):

The income tax rate is 34 percent.

Required
A. Calculate the rate of return on assets for each company.
B. Break the rate of return on assets into return on sales and total asset turnover.
C. Comment on the relative profitability of the twocompanies.

Transcribed Image Text:

Company 1 Revenues Interest expense Net income Average total assets $3,043 95 852 2,841 Company 2 $8,017 184 1,426 7,671