Croix Corporation and Rye Corporation, two corporations of roughly the same size, are both involved in the manufacture of canoes and sea kayaks. Each company depreciates its plant assets using the straight-line approach. An investigation of their financial statements reveals this information:

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(a) For each company, calculate these values:
(1) Average age of plant assets (2) Average useful life (3) Asset turnover ratio

(b) Based on your calculations in part (a), comment on the relative effectiveness of the two companies in using their assets to generate sales and produce net income. What factors complicate your ability to compare the two companies?

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Net income Sales Croix Corp. $ 400,000 1,400,000 Rye Corp. $ 600,000 1,200,000 1,500,000 Total assets 2,000,000 Plant assets 1,500,000 800,000 Accumulated depreciation 300,000 625,000 Depreciation expense 75,000 25,000 Intangible assets (goodwill) 300,000 0 Amortization expense 60,000 0