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The following financial ratios are for Average Corp. and Superior Corp., two hardware stores. Average 2.4 % Superior 3.7 % Net Income Margin = Net
The following financial ratios are for Average Corp. and Superior Corp., two hardware stores. Average 2.4 % Superior 3.7 % Net Income Margin = Net Income Sales Sales * Asset Turnover 3.17 x 2.87 x Total Assets * Financial Leverage = 1.58 x 1.52 x Total Assets Owners' Equity Net Income Owners' Equity = Return on Equity = 12% 16 % Which of the following statements is inconsistent with the above ratios? O Superior Corp has a higher return on equity primarily because it has a significantly higher net income margin Average Corp. on a relative basis uses significantly more debt financing than Superior Corp. Average Corp. utilizes its assets more effectively than Superior Corp. O Superior Corp. generates more income per dollar of sales than Average Corp
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