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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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