Nina Corporation and Vernon 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 the following information.

Nina Corp. Vernon Corp.

Net income $ 300,000 $ 325,000 Sales revenue 1,100,000 930,000 Average total assets 1,000,000 1,020,000 Average plant assets 750,000 770,000 Instructions

(a) For each company, calculate the asset turnover ratio.

(b) 12> 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.