The following data show four items from the financial statements of two companies for a recent year (amounts in millions of US$):

a. Compute the rate of return on assets for each company. Disaggregate the rate of return on assets into profit margin and total assets turnover components.
b. Compute the rate of return on equity for each company. Disaggregate the rate of return on equity into profit margin, total assets turnover, and financial leverage ratio components.
c. The two companies are a manufacturer of brand-name motorcycles and an operator of specialty retail coffee shops, primarily in rented facilities. Which of the companies corresponds to A and B? What clues did you use in reaching yourconclusions?

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Company A Company B For Year S3,750 476 $6,143 934 Revenues. Average During Year 2,458 2,256 5,594 2,566