Form groups of four to six students. Each student should choose an industry (a different industry for each student in the group) and pick two companies in that industry. Compute the following for each of the companies:
1. EBIT-to-sales
2. Total asset turnover
3. Return on total assets
Get together as a group and list the industries and the three ratios for each company in the industry. Examine how the ratios differ between the two companies within each industry compared with the differences between industries. As a group, prepare two lists of possible explanations for the differences in ratios. The first list should explain why ratios of two companies within the same industry might differ. The second list should explain why ratios differ by industry.