James builds brick walls for custom homes. His annual sales are approximately $300,000, and his net income

Question:

James builds brick walls for custom homes. His annual sales are approximately $300,000, and his net income is $18,000. He has assets of $100,000 invested in this business. Tom sells window shades. His annual sales are approximately $900,000, and his net income is $27,000. He has assets of $150,000 invested in his business.
a. Compute the net profit margin for both James and Tom.
b. Compute the for both James and Tom.
c. Compare the profitability of these two firms, and discuss the similarities and differences.
Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.