Comparing Abercrombie & Fitch and TJX Companies

Following are selected financial statement data from Abercrombie & Fitch (ANF-upscale clothing retailer) and TJX Companies (TJX-value-priced clothing retailer including TJ Maxx) -- both dated the end of January 2009 or 2008.

($ millions) Company Total Assets Net Income Sales

2008 TJX Companies Inc. $6,600

2009 TJX Companies Inc. 6,178 $ 881 $19,000

2008 Abercrombie & Fitch 2,568

2009 Abercrombie & Fitch 2,848 272 3,540

a. Compute the return on assets for both companies for the year ended January 2009.

Round your answers to one decimal place.

b. Disaggregate the ROAs for both companies into the profit margin and asset turnover.

Round profit margin answers to one decimal place.

Round asset turnover answers to two decimal places.

c. What is a likely interpretation of the results of your computations for parts a and b?