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 $108,949 $62,771 Net income 26,622 4,192 Total assets, beginning 75,883 39,799 Total assets, ending 117,771 45,933
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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