Kampa Company and Arb or Co mpany are sinmilar fi ms that operate in t he sa me induastry. Arbor began operations in 2001 and Ka mpa in 1995. In 20 06, both companies pay 79% interest on their debt to creditors. The following additional information is available: KAMPA COMPANY ARBOR COMMPANY 2006 2005 2004 2006 2005 2004 2.7 Total a sset turnover Return on total assets Profit margin 3.0 8.9% 2.3% $400,000 9.5% 2.4% $370,000 2.9 8.7% 2.2% $386.000 1.6 5.8% 2.7% $200,000 1.4 5.5% 2.9% $160,000 1.1 5.2% 2.8% $100,00o Sales -.- Write a one-halfpage rep ort conmparing Kampa and Arbor using the available information. Your discussion sh ould include their ability t o use assets efficiently to produce profits. Als o com ment on their success in employ ing financial leverage in 2 006.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Kampa Co mpany and A rbor Company are similar fir ms that operate in the sa me in dustry. Arbor
began operations in 2001 and Kampa in 1995. In 20 06, both companies pay 7 % interest on their
debt t o creditors. The following additional infor mation is available:
KAMPA COMPANY
ARBOR COMPANY
2006
2005
2004
2006
2005
2004
Total a sset turnover
Return on total assets
Profit margin
3.0
8.9%
2.3%
$400,000
2.7
2.9
1.6
1.4
1.1
5.2%
9.5%
2.4%
$370,000
8.7%
5.8%
5.5%
2.7%
$200,000
2.2%
2.9%
2.8%
Sales
$386.000
$160,000
0
$100,000
Write a one-half page report comparing Kampa and Arb or using the available information. Your
discussion sh ould include their ability to use assets efficiently to produce profits. Als o com ment
on their success in employing financial leverage in 2 006.
Selected comparative financial statements of Coh orn Co mpany follow:
Transcribed Image Text:Kampa Co mpany and A rbor Company are similar fir ms that operate in the sa me in dustry. Arbor began operations in 2001 and Kampa in 1995. In 20 06, both companies pay 7 % interest on their debt t o creditors. The following additional infor mation is available: KAMPA COMPANY ARBOR COMPANY 2006 2005 2004 2006 2005 2004 Total a sset turnover Return on total assets Profit margin 3.0 8.9% 2.3% $400,000 2.7 2.9 1.6 1.4 1.1 5.2% 9.5% 2.4% $370,000 8.7% 5.8% 5.5% 2.7% $200,000 2.2% 2.9% 2.8% Sales $386.000 $160,000 0 $100,000 Write a one-half page report comparing Kampa and Arb or using the available information. Your discussion sh ould include their ability to use assets efficiently to produce profits. Als o com ment on their success in employing financial leverage in 2 006. Selected comparative financial statements of Coh orn Co mpany follow:
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