Le Chteau Inc. and Reitmans (Canada) Limited are two competitors in the retail clothing industry. They reported
Question:
Le Château Inc. and Reitmans (Canada) Limited are two competitors in the retail clothing industry. They reported the following information in 2012 (in millions of dollars):
....................................Le Château................ Reitmans
Total assets, 2012................... $233.8.................. $ 633.9
Total assets, 2011..................... 246.1................... 659.4
Net sales, 2012........................ 302.7................. 1,019.4
Profit (loss), 2012..................... (2.4)..................... 47.5
Industry averages are as follows: profit margin, 6.0%; asset turnover, 2.0 times; and return on assets, 12.0%.
Instructions
(a) For each company, calculate the profit margin, asset turnover, and return on assets ratios for 2012.
(b) Based on your calculations in part (a), comment on how effectively each company is using its assets to generate sales and produce profit.
(c) What additional information about long-lived assets would assist you in your comparison of the two companies in part (b)?
Step by Step Answer:
a in millions Le Chteau Reitmans Profit margin 243027 08 47510174 47 Asset turnover 30272338 24612 1...View the full answer
Financial Accounting Tools for Business Decision Making
ISBN: 978-1118644942
6th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
