Exercise 13-16 Interpreting financial ratios LO A1, P3 Roak Company and Clay Company are similar firms that operate in the same Industry. Clay began operations 2 years ago and Roak started 5 years ago. In the current year, both companies pay 9% Interest on their debt to creditors. The following additional Information Is available. Total asset turnover Return on total assets Profit margin ratio Sales Current Yr 3.6 11.0% Roak Company 1 Yr Ago 3.3 10.6% 2 Yrs Ago Current Yr Clay Company 1 Yr Ago 2 Yrs Ago 3.5 2.0 2.0 1.6 11.2% 7.9% 7.6% 7.3% 2.9% $435,000 3.0% 2.8% 3.8% 4.0% 3.9% $405,000 $421,000 $235,000 $195,000 $135,000 1. (a) Which company has the better profit margin? (b) Which has the better asset turnover? (c) Which has the better return on assets? 2. Which company has the better rate of growth in sales? 3. (a) Did Roak successfully use financial leverage in the current year? (b) Did Clay? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 (a) which company has the better profit margin? (b) Which has the better asset turnover? (c) which has the better return on assets? (a) Which company has the better profit margin? (b) Which has the better asset turnover? (c) Which has the better return on assets?