Below are selected ratios for Manufacturers Corporation. Use this information answer the following questions.

Year 1 Year 2 Year 3

1. Nt operating asset turn over 1.4 1.31 1.25

2. Inventory turnover 5.6 5.0 4.6

3. Accounts receivable turnover 12.1 11.9 12.1

4. Fixed assets turnover 1.3 1.29 1.29

5. Net operating profit margin 4.5% 4.6% 4.8%

6. Net operating assets/equity 2.10 1.98 1.77

7. EBIT/Revenues 8.9% 8.6% 8.6%

8. Gross margin 20.1% 19.9% 19.8%

9. Income tax rate 35% 35% 35%

a. Calculate return on net operating assets for all three years. Identify reasons for any hanges.

b. Calculate return on equity for all three years. Comment on changes.