Ramer Company and Matson Company
Assume the Following Information

Multiple Choice

Ramer Company and Matson Company
Assume the following information for Ramer Company, Matson Company, and for their common industry for a recent year.
$\begin{array}{llll}&\text { Ramer } & \text { Matson } & \text { Industry Average }\\\text { Current ratio } & 3.50 & 2.80 & 3.00 \\\text { Accounts receivable turnover } & 5.00 & 8.10 & 6.00 \\\text { Inventory tumover } & 6.20 & 8.00 & 6.10 \\\text { Interest coverage ratio } & 9.00 & 12.30 & 10.40 \\\text { Debt-equity ratio } & 0.70 & 0.40 & 0.55 \\\text { Retum on investment } & 0.15 & 0.12 & 0.15 \\\text { Dividend payout ratio } & 0.80 & 0.60 & 0.55 \\\text { Earnings per share } & \$ 3.00 & \$ 2.00 & -\end{array}$ (CMA adapted, Jun 90 #18) Regarding the data for Ramer and Matson Company, if a company is profitable and is effectively using leverage, which one of the following ratios is likely to be the largest?

A) return on total assets
B) return on operating assets
C) return on common equity
D) return on investment
E) none of the above