2. Consider the following two companies:

(#s in $millions)	Company A	Company B
Sales	5,990	10,500
EBIT	600	1120
Interest	40	320
Earnings Before Tax	560	800
Taxes @ 40%	224	320
Net Income	336	480
Debt	400	3,200
Equity	1,600	800

a. Calculate each companys ROE, ROA, and ROIC.

b. Why is company Bs ROE so much higher than As? Does this mean B is a better company? Why or why not?

d. How do the two companies ROIC compare? What does this suggest about the two companies?