Review the financial ratios of company X and its competitor and fill in the blanks:

	Company X	Competitor
ROE (%)	54	48.6
ROA (%)	36	21.6
Debt-to-Equity	0.5	1.25
Current Ratio	1.25	1.47
Quick Ratio	0.45	0.67
Net Profit Margin (%)	16	18
Financial Leverage	1.5	2.25
Interest Coverage	35	55
Total Asset Turnover	2.25	1.2
Days of Sales Outstanding	77	83
Days of Inventory Outstanding	210	189

1) What company has provided its common shareholders a higher rate of return on their investment, i.e., has a more effective management team?

2) Why does this company outperform?

a) Because its assets are more profitable

or

b) Because it has used more financial leverage