Purchase Solution

Roger Corporation and Sean Corporation

Not what you're looking for?

Ask Custom Question

P9-6A

Roger Corporation and Sean Corporation, two companies of roughly the same size are both involved in the manufacturer of shoe tracing devices. Each company depreciates its plant assets using the straight line approach. An investigation of their financial statements reveals the information shown:

Roger Corp. Sean Corp.

Net Income $400,000 $500,000
Sales $1,300,000 $1,200,000
Total Assets (avg.) $3,300,000 $2,900,000
Plant Assets (avg.) $2,400,000 $1,800,000
Intangible Assets $300,000 0

a) For each company calculate these values:

1) Return on assets ratio
2) Profit margin
3) Asset turnover ratio

B) Based on your calculations in part (a) comment on the relative effectiveness of the two companies in using their assets to generate sales. What factors complicate your ability to compare the two companies?

Attachments
Purchase this Solution

Solution Summary

This solution is comprised of a detailed explanation to calculate the following ratios for Roger and Sean Corporation and comment on the relative effectiveness of the two companies in using their assets to generate sales, and answer what factors complicate your ability to compare the two companies:-

1) Return on assets ratio
2) Profit margin
3) Asset turnover ratio

Solution Preview

P9-6A

Roger Corporation and Sean Corporation, two companies of roughly the same size are both involved in the manufacturer of shoe tracing devices. Each company depreciates its plant assets using the straight line approach. An investigation of their financial statements reveals the information shown:

Roger Corp. Sean Corp.

Net Income ...

Purchase this Solution


Free BrainMass Quizzes
Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Motivation

This tests some key elements of major motivation theories.

Operations Management

This quiz tests a student's knowledge about Operations Management