El$-37.$

Computing and Interpreting Financial Statement Ratios

Following are selected fiscal year $($FY$)$ ratios of Norfolk Southern

Return on Assets $($ROA$)$ Component

Profitability $($Net income$/$Sales$)$

Productivity $($Sales$/$Average assets$).$

Was the company profitable in FY$4?$

In which year was the company more profitable?

FY$4$

$25\mathrm{.}7\%$

$0\mathrm{.}329$

FY$3$

$27\mathrm{.}0\%$

$0\mathrm{.}291$

a$.$

b$.$

c$.$

d$.$

e$.$

Is the change in productivity a positive or negative development?

Compute the company's ROA for both years.

From the information, which of the following best explains the change in ROA during FY$4?$

$1.$

$2.$

$3.$

$4.$

The company's profitability and productivity both weakened.

The company's profitability weakened, but its productivity improved.

The company had markedly more assets in FY$4.$

The company had a marked drop in revenue in FY$4.$