Sub Station and Planet Sub reported the following selected financial data. 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 Net sales Net income Total assets, beginning Total assets, ending Required: Planet Sub $110,149 $63,971 27,822 5,392 77,083 42,199 120,171 48,333 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 more favorable profit margin? 3-b. Which company has the more favorable asset turnover? 3-c. Are the two ratios consistent with the primary business strategies of the two companies?
Sub Station and Planet Sub reported the following selected financial data. 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 Net sales Net income Total assets, beginning Total assets, ending Required: Planet Sub $110,149 $63,971 27,822 5,392 77,083 42,199 120,171 48,333 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 more favorable profit margin? 3-b. Which company has the more favorable asset turnover? 3-c. Are the two ratios consistent with the primary business strategies of the two companies?
Chapter1: Financial Statements And Business Decisions
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