Sub Station and Planet Sub reported the following selected financial data ($ in thousands). Sub Station’s business strategy is to sell the best tasting sandwich with the highest quality ingredients. Planet Sub’s business strategy is to sell the lowest cost sub on the planet. Sub StationPlanet SubNet sales109,64963,471Net income27,3224,892Total assets, beginning76,58341,199Total assets, ending119,17147,333Required:1. Calculate Sub Station’s 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 higher profit margin?Sub Station’sPlanet Sub3-b. Which company has the higher asset turnover?Sub Station’sPlanet Sub3-c. Are the two ratios consistent with the primary business strategies of the two companies?YesNo Required:1. Calculate Sub Station's return on assets, profit margin, and asset turnover ratio. (Enter your answers in thousands of dollars. (i.e.123,000 should be entered as 123).)Return on AssetsChoose NumeratorChoose DenominatorReturn on AssetsReturn on assets+Profit MarginChoose NumeratorChoose DenominatorProfit Margin%3DProfit MarginAsset TurnoverChoose NumeratorChoose DenominatorAsset TurnoverAsset Turnover=timesIIII

Assets turnover ratio is calculated to check the efficiency of the firm. It represents the manner in…

Answered: Sub Station and Planet Sub reported the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sub Station and Planet Sub reported the following selected financial data ($ in thousands). Sub Station’s business strategy is to sell the best tasting sandwich with the highest quality ingredients. Planet Sub’s business strategy is to sell the lowest cost sub on the planet.

	Sub Station	Planet Sub
Net sales	109,649	63,471
Net income	27,322	4,892
Total assets, beginning	76,583	41,199
Total assets, ending	119,171	47,333

Required:

1. Calculate Sub Station’s 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 higher profit margin?

Sub Station’s
Planet Sub

3-b. Which company has the higher asset turnover?

Sub Station’s
Planet Sub

3-c. Are the two ratios consistent with the primary business strategies of the two companies?

Required:
1. Calculate Sub Station's return on assets, profit margin, and asset turnover ratio. (Enter your answers in thousands of dollars. (i.e.
123,000 should be entered as 123).)
Return on Assets
Choose Numerator
Choose Denominator
Return on Assets
Return on assets
+
Profit Margin
Choose Numerator
Choose Denominator
Profit Margin
%3D
Profit Margin
Asset Turnover
Choose Numerator
Choose Denominator
Asset Turnover
Asset Turnover
=
times
II
II

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