Sub Station and Planet Sub reported the following selected financial data. Sub Station's business strategy is to sell the best-tasti sandwich with the highest-quality ingredients. Planet Sub's business strategy is to sell the lowest-cost sub on the planet. Net sales Net income Total assets, beginning Total assets, ending Sub Station Planet Sub $108,749 26,422 75,683 117,371 $62,571 3,992 39,399 45,533 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-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-tasti sandwich with the highest-quality ingredients. Planet Sub's business strategy is to sell the lowest-cost sub on the planet. Net sales Net income Total assets, beginning Total assets, ending Sub Station Planet Sub $108,749 26,422 75,683 117,371 $62,571 3,992 39,399 45,533 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-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
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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.
Net sales
Net income
Total assets, beginning
Total assets, ending
Sub Station Planet Sub
$108,749
26,422
75,683
117,371
$62,571
3,992
39,399
45,533
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-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?
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