Below are selected rates for Manufacturers Corporation.

Using this information, answer the following questions.

Year 1 Year 2 Year 3

Net operating asset turnover 1.4 1.31 1.25

Stock turnover 5.6 5.0 4.6

Receivables turnover 12.1 11.9 12.1

Fixed asset turnover 1.3 1.29 1.29

Net operating margin 4.5% 4.6% 4.8%

Net operating assets/equity 2.10 1.98 1.77

EBITDA/revenues 8.9% 8.6% 8.6%

Gross margin 20.1% 19.9% 19.8%

Income tax rate 35% 35% 35%

A. Calculate the return on net operating assets for all three years. Identify the reasons for the changes.

B. Calculate the return on equity for all three years. Comment on the changes.