Question
Ivanhoe Limited competes in the fast food industry with Sarasota Limited. Ivanhoe underwent a major expansion in 2021, borrowing a large amount of money and
Ivanhoe Limited competes in the fast food industry with Sarasota Limited. Ivanhoe underwent a major expansion in 2021, borrowing a large amount of money and acquiring a small competitor. The acquisition doubled the number of restaurants that Ivanhoe has. Sarasota, on the other hand, took a more conservative approach and did not buy any new assets, focusing instead on making existing operations more efficient. Data for the two companies are provided below (in thousands of dollars):
2021 | 2020 | 2019 | ||||||
Ivanhoe | ||||||||
Total assets | $1,830 | $1,107 | $990 | |||||
Sales | 3,224 | 1,540 | 1,600 | |||||
Net income | 358 | 146 | 140 | |||||
Sarasota | ||||||||
Total assets | 768 | 954 | 990 | |||||
Sales | 1,810 | 1,663 | 2,000 | |||||
Net income | 168 | 197 | 210 |
(a) Calculate the (1) profit margin, (2) asset turnover, and (3) return on asset ratios for each company in 2020 and 2021. (Round answers to 1 decimal place, e.g. 5.2% or 5.2.)
Ivanhoe | Sarasota | ||||||||||||||
2020 | 2021 | 2020 | 2021 | ||||||||||||
(1) | Profit margin | % | % | % | % | ||||||||||
(2) | Asset turnover | times | times | times | times | ||||||||||
(3) | Return on assets | % | % | % | % |
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