Calculating and disaggregating the rate of return on assets Recent annual reports of CBRL Group (Cracker Barrel) and McDonalds Corporation (McDonalds) reveal the following (amounts in millions):

Cracker Barrel operates a chain of restaurants featuring value-priced country meals. Cracker Barrel owns all of its restaurants. McDonalds operates McDonalds. Boston Market, and Chipotle Mexican Grill restaurants Worldwide through both company-owned and franchised units McDonalds owns the land and buildings of most of its franchised restaurants and leases the space to the franchisees. The income tax rate is 35%.

a. Calculate the rate of return on assets for each company.

b. Disaggregate the rate of return on assets in part a into profit margin for ROA and total assets turnover components.

c. Comment on the relative profitability of the twocompanies.

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Cracker Barrel $2,352 McDonalds Revenues.. Interest Expense.. Net Income. Average Total Assets . $22,787 59 417 2,335 29,183 76 1,473