Question 1 Ratios:
a) The table below presents selected ratios for two firms. One firm is in the transportation
industry, while the other is in the food industry. The transportation firm owns and operates
railways, and also operates a trucking division. The firm in the food industry is a major food
distributor, as well as a leading provider of drugstore, general merchandise and financial
products and services.
Collection Period (days)
Total Debt / Total Assets
Long-term debt / Equity
Revenues / Total Assets
Net Income / Revenues
Net Income / Equity
Cash and Marketable Securities (% of Total assets)
PPE (% of Total assets)
Accounts Payable (% of Total assets)
Identify the two firms and provide four different reasons that motivate your choice (briefly explain
by making explicit reference to the respective business models).
b) Assume that Firm A’s NOPAT is 18.68% of its revenues. What is Firm A’s ROA for that year?