The Table also provides financial indicators for the chemical and related products industry (Chemicals and Allied Products) for the year 2018. This will allow you to compare the performance of both firms J & J and Merck with the industry in which they compete for the same year. (20 points)

1. Do you understand that the performance of firms is superior to the average performance of their competitors in the market? Justify your answer.

2. What adjustments or changes would you recommend to make each of the firms more attractive to shareholders and others interested in them? Justify your answer.

Company Name:	Year 2018		Chemicals and Allied Products Industry Ratios
..
Solvency or Debt Ratios	Merck	J&J	2018
Debt ratio	0.67	0.61	0.47
Debt-to-equity ratio	0.93	0.51	0.38
Interest coverage ratio	12.27	18.91	-9.43
Liquidity Ratios
Current ratio	1.17	1.47	3.47
Quick ratio	0.92	1.16	2.12
Cash ratio	0.40	0.63	2.24
Profitability Ratios
Profit margin	14.64%	18.75%	-93.4%
ROE (Return on equity), after tax	23.03%	25.60%	-248.5
ROA (Return on assets)	7.49%	10.00%	-146.5
Gross margin	68.06%	66.79%	55.3%
Operating margin (Return on sales)	19.62%	24.27%	-42.9%
Activity or Efficiency Ratios
Asset turnover	0.51	0.53	1.08
Receivables turnover (days)	61.02	63	16
Inventory turnover (days)	146.98	129	36
Price Ratios
Dividend Payout Ratio	0.84	0.62	0.15