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Information about two video game companies was recently taken from te companies' annual reports. Virtual Videos and Games Galore both have an income tax rate
Information about two video game companies was recently taken from te companies' annual reports. Virtual Videos and Games Galore both have an income tax rate of 34% and the following is the information collected from the two stores (amounts in thousands):
Virtual Videos Games Galore
Sales $15,134 $20,143
Interest Expense 80 150
Net Income 524 982
Average total assets 3,048 7,125
Required:
Calculate the return on assets, return on sales and asset turnover for both companies. What can you tell about each company on the basis of these ratios?
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