Companies in the tire manufacturing business use a lot of property, plant, and equipment. Tyrell Rubber and Tire Corporation and Maxwell Rubber and Tire Manufacturing are two of the leading manufacturers. In additiion, Maxwell also operates over 1,000 tire service center outlets. Tyrell Rubber & Tire Maxwell Rubber & Tire Sales $2,918 $15,585 Depreciation and depletion costs 185 950 Property, plant, and equipment (net of accumulated depreciation) 976 6,146 Total assets 2,633 16,982 Depreciation method Straight-line Straight-line Depletion method Units of production Units of production Estimated life of assets Buildings 10 to 40 years 3 to 45 years Machinery and equipment 2 to 14 years 3 to 40 years Net income $105 $875 Required Calculate depreciation costs as a percentage of sales for each company. Calculate property, plant, and equipment as a percentage of total assets for each company. Based only on the percentages calculated in Requirements a and b, which company appears to be using its assets most efficiently? Calculate the return-on-assets ratio for each company. Based on this ratio, which company appears to be using its assets most
Companies in the tire manufacturing business use a lot of property, plant, and equipment. Tyrell Rubber and Tire Corporation and Maxwell Rubber and Tire Manufacturing are two of the leading manufacturers. In additiion, Maxwell also operates over 1,000 tire service center outlets. Tyrell Rubber & Tire Maxwell Rubber & Tire Sales $2,918 $15,585 Depreciation and depletion costs 185 950 Property, plant, and equipment (net of accumulated depreciation) 976 6,146 Total assets 2,633 16,982 Depreciation method Straight-line Straight-line Depletion method Units of production Units of production Estimated life of assets Buildings 10 to 40 years 3 to 45 years Machinery and equipment 2 to 14 years 3 to 40 years Net income $105 $875 Required Calculate depreciation costs as a percentage of sales for each company. Calculate property, plant, and equipment as a percentage of total assets for each company. Based only on the percentages calculated in Requirements a and b, which company appears to be using its assets most efficiently? Calculate the return-on-assets ratio for each company. Based on this ratio, which company appears to be using its assets most
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 69APSA: A Cost of a Fixed Asset Mist City Car Wash purchased a new brushless car-washing machine for one of...
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Companies in the tire manufacturing business use a lot of property, plant, and equipment. Tyrell Rubber and Tire Corporation and Maxwell Rubber and Tire Manufacturing are two of the leading manufacturers. In additiion, Maxwell also operates over 1,000 tire service center outlets.
| Tyrell Rubber & Tire | Maxwell Rubber & Tire | |
|---|---|---|
| Sales | $2,918 | $15,585 |
| 185 | 950 | |
| Property, plant, and equipment (net of |
976 | 6,146 |
| Total assets | 2,633 | 16,982 |
| Depreciation |
Straight-line | Straight-line |
| Depletion method | Units of production | Units of production |
| Estimated life of assets | ||
| Buildings | 10 to 40 years | 3 to 45 years |
| Machinery and equipment | 2 to 14 years | 3 to 40 years |
| Net income | $105 | $875 |
Required
- Calculate depreciation costs as a percentage of sales for each company.
- Calculate property, plant, and equipment as a percentage of total assets for each company.
- Based only on the percentages calculated in Requirements a and b, which company appears to be using its assets most efficiently?
- Calculate the return-on-assets ratio for each company. Based on this ratio, which company appears to be using its assets most
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