Rolf Company and Kent Company are similar firms that operate in the same industry. Kent began op¬

erations in 2005 and Rolf in 2002. In 2007, both companies pay 7% interest on their debt to credi¬

tors. The following additional information is available:

Write a half-page report comparing Rolf and Kent using the available information. Your analysis should include their ability to use assets efficiently to produce profits. Also comment on their suc¬
cess in employing financial leverage in 2007.

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Rolf Company 2007 2006 2005 2007 Kent Company 2006 2005 Total asset turnover 3.0 2.7 2.9 1.6 1.4 1.I Return on total assets 8.9% 9.5% 8.7% 5.8% 5.5% 5.2% Profit margin ratio 2.3% 2.4% 2.2% 2.7% 2.9% 2.8% Sales $400,000 $370,000 $386,000 $200,000 $160,000 $100,000