Problem - The Following table presents ROA calculations for 3 companies in the retail grocery industry using earnings (EBI) and balance sheet data for each company. These companies compete on price, quality of goods and service, convenience, and product mix. 7-eleven operates convenience stores and generates approximately 25% of its revenue from gasoline sales. Publix Super Markets operates retail food supermarkets in Florida, Georgia, South Carolina, Alabama, and Tennessee. Albertson's is the second largest US supermarket chain.
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7-Eleven Corp.
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Year 1
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Year 2
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Year 3
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Year 4
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Sales
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$8,251,700
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$9,178,711
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$9,622,301
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$10,109,744
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Profit Margin (EBI/Sales)
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1.7%
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1.8%
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1.4%
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0.9%
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Asset Turnover (Sales/Average Assets)
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3.20
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3.38
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3.41
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3.39
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ROA = Margin x Asset Turnover
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5.5%
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6.0%
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4.9%
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3.1%
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Publix Super Markets
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Year 1
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Year 2
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Year 3
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Year 4
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Sales
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$13,068,900
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$14,575,031
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$15,284,229
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$15,930,602
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Profit Margin (EBI/Sales)
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3.5%
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3.6%
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3.5%
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4.0%
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Asset Turnover (Sales/Average Assets)
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3.38
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3.49
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3.53
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3.46
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ROA = Margin x Asset Turnover
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11.9%
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12.7%
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12.3%
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13.8%
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Albertson's
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Year 1
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Year 2
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Year 3
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Year 4
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Sales
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$37,478,000
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$35,501,000
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$36,605,000
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$35,626,000
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Profit Margin (EBI/Sales)
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1.6%
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2.7%
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2.7%
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3.1%
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Asset Turnover (Sales/Average Assets)
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2.43
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2.23
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2.28
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2.28
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ROA = Margin x Asset Turnover
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3.9%
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6.1%
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6.3%
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7.0%
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Which company has shown the strongest sales growth over the past three years?