James builds brick walls for custom homes. His annual sales are approximately$300,000, and his net income is $18,000. He has assets of $100,000invested in this business. Tom sells window shades. His annual sales areapproximately $900,000, and his net income is $27,000. He has assets of$150,000 invested in his business.a. Compute the net profit margin for both James and Tom.b. Compute the asset turnover for both James and Tom.c. Compare the profitability of these two firms, and discuss the similarities anddifferences.
James builds brick walls for custom homes. His annual sales are approximately$300,000, and his net income is $18,000. He has assets of $100,000invested in this business. Tom sells window shades. His annual sales areapproximately $900,000, and his net income is $27,000. He has assets of$150,000 invested in his business.a. Compute the net profit margin for both James and Tom.b. Compute the asset turnover for both James and Tom.c. Compare the profitability of these two firms, and discuss the similarities anddifferences.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
James builds brick walls for custom homes. His annual sales are approximately
$300,000, and his net income is $18,000. He has assets of $100,000
invested in this business. Tom sells window shades. His annual sales are
approximately $900,000, and his net income is $27,000. He has assets of
$150,000 invested in his business.
a. Compute the net profit margin for both James and Tom.
b. Compute the asset turnover for both James and Tom.
c. Compare the profitability of these two firms, and discuss the similarities and
differences.
Expert Solution
Trending now
This is a popular solution!
Step by step
Solved in 9 steps with 7 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education