Sara Togas sells all its output to Federal Stores. The following table shows selected financial data, in millions, for the two firms:

	Sales	Interest Payment	Net Income	Assets at Start of Year
Federal Stores	$101	$5	$11	$51
Sara Togas	21	2	5	20.5

Assume tax rate is 35%.

1 Calculate the sales-to-assets ratio, the operating profit margin, and the return on assets for the two firms.

2 Now assume that the two companies merge. If Federal continues to sell goods worth $101 million, how will the three ratios change?