question archive Sub Station and Planet Sub reported the following selected financial data ($ in thousands)

Sub Station and Planet Sub reported the following selected financial data ($ in thousands)

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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 $ 110,249    $ 64,071   
  Net income 27,922    5,492   
  Total assets, beginning 77,183    42,399   
  Total assets, ending 120,371    48,533   

 

1. Calculate Sub Station’s return on assets, profit margin, and asset turnover ratio. (Enter your answers in thousands of dollars. (i.e. 123,000 should be entered as 123).)

2. Calculate Planet Sub's return on assets, profit margin, and asset turnover ratio. (Enter your answers in thousands of dollars. (i.e. 123,000 should be entered as 123).)

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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