Question
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
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 | $ 119 | $ 23 | $ 29 | $ 69 |
| Sara Togas | 39 | 20 | 23 | 39 |
Assume tax rate is 21%.
Calculate the sales-to-assets ratio, the operating profit margin, and the return on assets for the two firms.
Now assume that the two companies merge. If Federal continues to sell goods worth $119 million, how will the three ratios change?
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Multinational Finance
Authors: Kirt C. Butler
3rd Edition
0324177453, 978-0324177459
