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Sara Togas sells all its output to Federal Stores. The following table shows selected financial data, in millions, for the two firms: Interest Payment $12
Sara Togas sells all its output to Federal Stores. The following table shows selected financial data, in millions, for the two firms: Interest Payment $12 9 Sales $108 28 Federal Stores Sara Togas Assets at Start of Year $58 24.0 Net Income $18 12 Assume tax rate is 35%. a. Calculate the sales-to-assets ratio, the operating profit margin, and the return on assets for the two firms. (Do not round intermediate calculations. Round the sales-to-assets ratio answers to 2 decimal places. Enter the operating profit margin and return on assets answers as a percent rounded to 2 decimal places.) Federal Stores Sara Togas Sales-to-assets ratio Operating profit margin % % Return on assets % % b. Now assume that the two companies merge. If Federal continues to sell goods worth $108 million, how will the three ratios change? (Do not round intermediate calculations. Round the sales-to-assets ratio answer to 2 decimal places. Enter the operating profit margin and return on assets answers as a percent rounded to 2 decimal places.) Merged Firm Sales-to-assets ratio Operating profit margin Return on assets % %
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