The following data are taken from the 1979 annual reports of Alabama Company and Carolina Company.

a Determine the rate of return on assets for each company.
b Disaggregate the rate of return in part a into profit margin and total assets turnover components.
c Comment on the relative performance of the two companies.

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Sales Expenses Other Than Interest and Income Taxes Alabama Co. Carolina Co. $2,000,000 $2,400,000 1,700,000 2,150,000 100,000 50,000 80,000 80,000 120,000 120,000 Average Total Assets During the Year 1,500,000 1,000,000 Interest Expense Income Tax Expense at 40 Percent Net Income