Consider the financial data for Johnson & Johnson and Procter & Gamble Co. for the fiscal year 2022:

($ millions)	Johnson & Johnson	Procter & Gamble Co.
Net sales	$101,239	$82,034
Cost of sales	37,921	41,805
Gross profit	63,318	40,229
Operating expenses:
Selling, general, and administrative (SG&A)	24,684	15,824
Research and development (R&D)	11,512	4,898
Operating income	27,122	19,507
Interest and other (income) expense	1,509	2,109
Interest and investment income	(564)	(712)
Earnings before provision for income taxes	26,177	18,110
Provision for income taxes	5,235	4,309
Net earnings	$20,942	$13,801

Required:

1. Compute the return on equity (ROE), return on assets (ROA), and return on financial leverage (ROFL) for each company in fiscal year 2022. Assume a tax rate of 30%.
2. Disaggregate the ROA into profit margin (PM) and asset turnover (AT) components. Identify which factor drives the ROA for each company.
3. Assess the trend in R&D expenses over the past five years. How does it impact each company’s innovation and long-term growth?
4. Evaluate the debt-to-equity ratio for Johnson & Johnson and Procter & Gamble Co. What does it suggest about their financial leverage?
5. Compare the gross profit margins of Johnson & Johnson and Procter & Gamble Co. What insights can be drawn about their production efficiency?