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

question 57

Multiple Choice

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.

---

Definitions:

Company Data

Information and metrics related to the operations, performance, and financials of a company.

Budgeted Balance Sheet

A financial statement projected for a future date, detailing the expected financial position of a company, including assets, liabilities, and equity.

Merchandise Purchases Budget

A financial plan that estimates the cost of goods a company needs to purchase to meet its sales goals.

Sales Budget

A financial plan that estimates the expected revenue from sales for a specific period, taking into account factors like market conditions, historical sales data, and economic forecasts.