Lennox International makes air conditioning, heating, and fireplace systems for residential and commercial uses, as well as commercial refrigeration equipment. American Standard Companies is a leading maker of air conditioning systems, plumbing products, and automo- tive braking systems. Selected financial statement data and asset utilization ratios for each company follow.

Required:
1. Compare the asset utilization effectiveness of these two companies. Which company seems to be doing the better job? Are any important industry trends apparent from these data?
2. Why does Lennox International have a lower ROA than does American Standard?

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American Standard Companies Year I Year 2 Year 3 Sales $7,598,370 $7,465,300 $7,795,400 ROA 0.09 0.08 0.09 Current assets turnover 4.22 3.96 3.99 Fixed (long-term) assets turnover 2.61 2.57 2.57 Total assets turnover 1.61 1.56 1.56 Lennox International Sales $3,242,204 $3,113,649 $3,025,767 ROA 0.05 (0.01) 0.05 Current assets turnover 3.62 3.86 4.36 Fixed (long-term) assets turnover 3.33 2.79 3.14 Total assets turnover 1.73 1.62 1.83.