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 highestquality ingredients. Planet Sub’s business strategy is to sell the lowest-cost sub on the planet. Sub Station Planet SubNet sales $ 108,249 $ 62,071Net income 25,922 3,492Total assets, beginning 75,183 38,599Total assets, ending 116,371 44,533Required: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. Which company has the higher profit margin and which company has the higher asset turnover? Is this consistent with the primary business strategies of these two companies?
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 highestquality ingredients. Planet Sub’s business strategy is to sell the lowest-cost sub on the planet.
Sub Station Planet Sub
Net sales $ 108,249 $ 62,071
Net income 25,922 3,492
Total assets, beginning 75,183 38,599
Total assets, ending 116,371 44,533
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. Which company has the higher profit margin and which company has the higher asset turnover? Is this consistent with the primary business strategies of these two companies?
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