. Use the following information from Luton Inc, and Bedford Inc, to answer Q5a, & Q5b. The companies compete in the same market.

Company Luton Bedford Sales $1,800,000 $2,600,000 Net Income 300,000 400,000 Average Assets 2,500,000 1,800,000 Average Liabilities 1,800,000 1,100,000

Q5a. Calculate the ROA, ROE, Margin, Turnover and Leverage for each Company. Round to one decimal place. [2 marks]

Show plausible calculations to get credit Luton Bedford ROA = ROE = Margin = Turnover = Leverage =

Q5b. Evaluate the relative performance of the two companies.

i. My evaluation is as follows. [1 marks]

ii. Which company would you invest in if you were risk averse? State and explain your choice. [ mark]

iii. Drawing on your analysis describe specific steps that operating management in each company could take to improve their companys performance? [1 mark]