Calculating and disaggregating rate of return on assets. Recent annual reports of Cracker Barrel Old Country Store (Cracker Barrel) and Outback Steakhouse (Outback)

reveal the following for Year 8 (in thousands):

Cracker Barrel operates a chain of restaurants featuring value-priced country meals. Its restaurants are open for all meals every day. Each restaurant also sells craft items with a country theme. Outback operates a chain of restaurants featuring steaks. Each restaurant carries an Australian theme and serves primarily the dinner meal. Outback tends to locate its restaurants in buildings that were formerly restaurants that went out of business. The income tax rate for Year 8 is 35 percent.

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 and total as- sets turnover components.

c. Comment on the relative profitability of the two companies for Year 8. 12. Profitability analysis for two types of retailers. Information taken from recent an- nual reports of two retailers appears as follows (amounts in thousands). One of these companies is TJX, a discount store chain featuring name-brand clothing, and the other is The Gap, a specialty retailer of apparel. The income tax rate is 35 percent. Indicate which of these companies is TJX and which is The Gap. Explain your rea- soning using appropriate financial ratios.

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Revenues Interest Expense Net Income Average Total Assets. Cracker Barrel Outback $1,317,104 $1,151,637 3,026 2,489 104,136 91,273 910,407 531,312