Presented below are selected ratios for four firms: Firm A is a heavy equipment manufacturer, Firm B is a newspaper publisher, Firm C is a food manufacturer, and Firm D is a grocery chain.

Required:
1. Which firm has the weakest current ratio?
2. Explain why the turnover ratios vary so much among the four firms.
3. Explain why the return on equity ratio is larger than the return on asset ratio for all four firms.
4. Discuss whether the large differences in the return on equity ratios can exist over long periods oftime.

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Firm A Firm B Firm C Firm D Short-term liquidity Debt-management ratio Asset efficiency ratios Current ratio Long-term debt-to-equity Accounts receivable turnover Inventory turnover Operating income Return on assets Return on equity 1.7 1.81 45 4.66 6.26 8.28 40.26 11.92 7.29 116.15 8.43 Profitability ratios 12.6% 5.9 21.2% 10.8 16.8 38.0 3.8% 25.4% 10.9 10.6 22.6 10.3 21.2 36.0