Chapter 24, Problem 2BTN

To determine

Introduction: -

Comparative analysis: Comparative analysis is one which determines an organization’s financial performance with a rival firm or else between different/ separate periods of time.

Profit margin ratio: Profit margin ratio is the net income earned by the sales made for a given period of time in a business. This ratio shows how much net income is shown on the sales. The ability to convert the sales into net income is calculated with the help of this ratio.

Formula of profit margin ratio: $\frac{netincome}{sales}$

Investment turnover ratio: Investment turnover ratio is defined as an ability of making the sales revenue with the money invested in an organization.

Formula of investment turnover ratio: $\frac{sales}{averageinvestedassets}$

Average invested assets: $\frac{beginninginvestedassests+endinginvestedassets}{2}$

To calculate:-

a) Profit margin for each company

b) Investment turnover for each company