1. Stel Corporation's return on goty ROL) 5% higher than Abbott Cos An nestent in Stellar Caporation should therefore produce a higher retum than an investment in the company's stock 2 Shell Corporation ROEKO Taroon on asset by a wider margin than doen Abbottom This means that Star Corporation is eaming more with its borrowed tands than Abbon Co in earring 3. Stellar Corporation can covers relexpense with operating income 19 mes compared to 13 me for Abbott Co Abbott collects receivabletter than Star Corporation does. This suggests that cash low stronger at Abboto Data Table About Co Corporation 15 41 2 Ratio Days' sales in recall Inventory tumover Gross prot percentage Noticones percent of sales Time Wrested Haturn on wity Return on ist BY 12 10 13 % 14 1. Stellar Corporation's return on equity (ROE) is 5% higher than Abbott Co.'s An investment in Stellar Corporation should therefore produce a higher return than an investment in the other company's stock. 2. Stellar Corporation's ROE exceeds its return on assets by a wider margin than does Abbott Co.'s means that Stellar Corporation is earning more with its borrowed funds than Abbott Co. is earning This 3. Stellar Corporation can cover its interest expense with operating income 19 times compared to 13 times for Abbo Co. does. This suggests that 4. collects receivables faster than cash flow is stronger at Abbott Co. cash flow is stronger at Abbott Co. cash flow is stronger at Stellar Corporation revenues are higher at Abbott Co. revenues are higher at Stellar Corporation Ratio Stellar Corporation Abbott Co. 48 41 11 7 58% 67% Days' sales in receivables Inventory turnover Gross profit percentage Net income as a percent of sales Times interest earned Return on equity Return on assets 13% 12% 13 19 30% 35% 19% 14% Check