Question
Sub Station and Planet Sub reported the following selected financial data. Sub Stations business strategy is to sell the best-tasting sandwich with the highest-quality ingredients.
Sub Station and Planet Sub reported the following selected financial data. Sub Stations business strategy is to sell the best-tasting sandwich with the highest-quality ingredients. Planet Subs business strategy is to sell the lowest-cost sub on the planet. Sub Station Planet Sub Net sales $109,349 $63,171 Net income 27,022 4,592 Total assets, beginning 76,283 40,599 Total assets, ending 118,571 46,733 Required: 1. Calculate Sub Stations return on assets, profit margin, and asset turnover ratio. 2. Calculate Planet Sub's return on assets, profit margin, and asset turnover ratio. 3-a. Which company has the more favorable profit margin? 3-b. Which company has the more favorable asset turnover? 3-c. Are the two ratios consistent with the primary business strategies of the two companies?
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