Reggie Corporation and Newman Corporation, two corporations of roughly the same size, are both involved in the manufacture of in-line skates. Each company depreciates its plant assets using the straight-line approach. An investigation of their financial statements reveals the 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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Reggie Corp. Newman Corp. Net income Sales $ 800,000 $1,000,000 1,600,000 1,300,000 Total assets 2,500,000 1,700,000 Plant assets 1,800,000 1,000,000 Accumulated depreciation 500,000 825,000 Depreciation expense 120,000 31,250 Intangible assets (goodwill) 300,000 Amortization expense 60,000 0 0