The following data show five items from the financial statements of three companies for a recent year (amounts in millions): 1 Net income + Interest expense Solution Return on Assets = Net income/Total Assets Return on Assets = Net income/Total Assets Return on Sales Return on Sales Asset Turnover Ratio = Total Revenue/Total Assets Asset Turnover Ratio = Total Revenue/Total Assets Type Company A: 645/9013 7.156% 645/8854 7.285% 8854/9013 0.9824 times Airline Company B: 1017/6838 14.87% 1017/9400 10.82% 9400/6838 1.3747 times Retail Company C: 610/7135 8.549% 610/11754 5.190% 11754/7135 1.6474 times Pharmaceutical .

1. The following data show five items from the financial statements of three companies for a recent
year (amounts in millions):
1
Net income + Interest expense
Company
A
Company
B
Company
C
For the Year
Revenues $8,854 $9,400 $11,754
Income before interest and related
taxes 1 645 1,017 610
Net income to common shareholders 2
453 982 495
Average during the Year
Total assets 9,013 6,838 7,135
Common shareholders' equity 2,700 3,490 2,840
Solution
Return on Assets = Net income/Total Assets Return on Assets = Net income/Total Assets Return
on Sales Return on Sales Asset Turnover Ratio = Total Revenue/Total Assets Asset Turnover
Ratio = Total Revenue/Total Assets Type Company A: 645/9013 7.156% 645/8854 7.285%
8854/9013 0.9824 times Airline Company B: 1017/6838 14.87% 1017/9400 10.82% 9400/6838
1.3747 times Retail Company C: 610/7135 8.549% 610/11754 5.190% 11754/7135 1.6474 times
Pharmaceutical