Business Analysis Question,help please?
Question:
Net Income 400,000 450,000
Sales 1,200,000 1,140,000
Average Total Assets 2,000,000 1,500,000
Plant Assets 1,500,000 800,000
For each comapny Calculate in :
a)Asset turnover ratio
b)Return on assets ratio
c)based on your calculation un part a,comment on the relative effectiveness of the two companies in using their assets to generate sales and produce net income.
Answer:
Asset turnover ratio is revenue/total assets. (http://answers.yahoo.com/question/;_ylt=... Return on assets ratio is net income/average total assets. (http://www.associatedcontent.com/article... The pages sited provide explanations of what these ratios mean, so that you can answer part C of your question.
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