Sara Togas sells all its output to Federal Stores. The following table shows selected financial data, in millions, for the two firms:

Sales Interest Payment Net Income Assets at Start of Year Federal Stores $100 $4 $10 $50 Sara Togas 20 1 4 20 Calculate the sales-to-assets ratio, the operating profit margin, and the return on assets for the two firms. Now assume that the two companies merge. If Federal continues to sell goods worth $100 million, how will the three ratios change?

AppendixLO1