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    Roger Corporation and Sean Corporation

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    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?

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    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 ...

    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

    $2.19

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