Analysis and Interpretation of Profit Margin, Asset Turnover, and RNOA for Several Companies Net operating profit margin (NOPM) and net operating asset turnover (NOAT) for several selected companies for the most recent year follow.

NOPM NOAT Abbott Laboratories . . . . . . . . . . . . . . 11.73% 0.95 FedEx Corp. . . . . . . . . . . . . . . . . . . . . 4.04% 3.50 CVS Health Corp. . . . . . . . . . . . . . . . . 3.76%2.77 Mondelez International Inc.. . . . . . . . 26.76% 0.70 Walgreens Boots Alliance Inc.. . . . . . 3.52% 3.18 Caterpillar Inc. . . . . . . . . . . . . . . . . . . 5.26% 2.96 Target Corp. . . . . . . . . . . . . . . . . . . . . 5.02% 5.47 Required

a. Graph NOPM and NOAT for each of these companies. Do you see a pattern that is similar to that shown in this module? Explain. (The graph in the module is based on medians for selected industries; the graph for this problem uses fewer companies than in the module and, thus, will not be as smooth.)

b. Consider the trade-off between profit margin and asset turnover. How can we evaluate companies on the profit margin and asset turnover trade-off? Explain.