Widget Co and Tools Inc -Which of the Following Statements Is Correct?
A)Widget Has Higher

Widget Co. and Tools Inc. both operate in the same industry. They are capital-intensive companies producing widgets. Below are selected data:
$\begin{array}{lll}&\text { Widget Co. }&\text { Tools Inc. }\\\text { Net operating assets/common equity } & 1.37 & 1.53 \\\text { Net operating profit margin } & 19 \% & 21 \% \\\text { Income tax rate } & 47 \% & 28 \% \\\text { Revenues/net operating assets } & 0.81 & 0.61 \\\text { EBIT/revenues } & 38 \% & 32 \%\end{array}$
-Which of the following statements is correct?

A) Widget has higher RNOA than Tools.
B) Widget has lower RNOA than Tools.
C) Widget has same RNOA as Tools.
D) Insufficient information to calculate RNOA.

Correct Answer:

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