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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 Assets
Sara Togas sells all its output to Federal Stores. The following table shows selected financial data, in millions, for the two firms: Interest Assets at Start Sales Federal Stores Sara Togas $117 37 Payment $21 18 Net Income $27 of Year 21 $67 28.5 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.) Sales-to-assets ratio Operating profit margin Return on assets Federal Stores 2.00 14.00 % 28.00% Sara Togas 1.00 25.00% 25.00% b. Now assume that the two companies merge. If Federal continues to sell goods worth $117 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.) Sales-to-assets ratio Operating profit margin Return on assets Merged Firm % %
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