Compare the two companys return on assets for the three years

a Which company has an advantage?

b Compare the two companies profit margin for ROA.

i Which companys is higher?

ii To what extent does each of the following contribute to the advantage in profit margin

Gross margin

Level of selling, general and administrative expenses

iii. Consider whether each of the following affects the difference in profit margin for ROA:

customer experience,

the franchise versus companyowned store difference.

Impact of company history on intangible assets and goodwill

c Compare the two companies asset turnover

i Which companys is higher?

ii To what extent do each of the following relate to the difference in asset turnover:

Receivables turnover

Inventory turnover

Fixed asset turnover

Level of intangible assets and goodwill

iii. Consider whether each of the following affects the difference in asset turnover:

customer experience,

the franchise versus companyowned store difference,

Impact of company history on goodwill and intangibles

relative debt levels related to financing.

Compare the two companies returns on common equity Which company has an advantage?

i Compare the two companies profit margin for ROCE. This differs from the profit margin for ROA because here, interest expense reduces the profit margin. Which companys profit margin for ROCE is more affected by including interest? Explain

ii Capital structure leverage is computed as average total assets divided by average total shareholders equity. For both companies, the negative common equity results in negative return on equity. Do you find this meaningful? Explain.