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 | $108,749 | $62,571 |
Net income | 26,422 | 3,992 |
Total assets, beginning | 75,683 | 39,399 |
Total assets, ending | 117,371 | 45,533 |
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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