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Financial Analysis and Planning

Could you help me calculate the sales-to-assets ratio, the profit margin, and the return on the two firms listed below;

Sales Profits Assets
Federal Stores $100 $10 $50
General Stores 20 4 20
(Financial data is in the millions)

If these two companies were to merge and the federal stores continued to sale goods worth $100 million, could you show me how the three financial ratios would change?

Solution Preview

The sales to asset ratio is calculated by dividing sales by the assets. For federal stores it is 100/50 = 2 and for General Stores it is 20/20=1.
The Profit Margin is calculated by dividing the profit by sales. For Federal Stores it is 10/100=10% and for ...

Solution Summary

The solution provides calculations for various ratios for Federal Stores and General Stores and a merger of two