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? Yes No
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? Yes No
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter5: Accounting For Retail Businesses
Section: Chapter Questions
Problem 3MAD: Compare Dollar Tree and Dollar General The asset turnover ratios for two recent years for Dollar...
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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?
-
Yes
-
No
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