Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
12th Edition
ISBN: 9781259144387
Author: Richard A Brealey, Stewart C Myers, Franklin Allen
Publisher: McGraw-Hill Education
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Chapter 28, Problem 19PS

Financial ratios Sara Togas sells all its output to Federal Stores. The following table shows selected 2017 financial data, in millions, for the two firms:

Chapter 28, Problem 19PS, Financial ratios Sara Togas sells all its output to Federal Stores. The following table shows

The company’s tax rate is 35%. 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 $100 million, how will the three ratios change?

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