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antiseptic1488 [7]
3 years ago
13

Roak Company and Clay Company are similar firms that operate in the same industry. Clay began operations 2 years ago and Roak st

arted 5 years ago. In the current year, both companies pay 9% interest on their debt to creditors. The following additional information is available.
Roak Company Clay Company
Current Yr 1 Yr ago 2 Yr ago Current Yr 1 Yr ago 2 Yr ago
Total asset turnover 4.8 4.5 4.7 3.2 3.8 2.8
Return on total assets 11% 13% 13.6% 7.9% 7.6% 7.3%
Profit margin ratio 4.1% 4.2% 4.0% 6.2% 6.4% 6.3%
Sales $495,000 $465,000 $481,000 $295,000 $255,000 $195,000

Required:
1. (a) Which company has the better profit margin? (b) Which has the better asset turnover? (c) Which has thebetter return on assets?
2. Which company has the better rate Of growth in sales?
3. (a) Did Roak successfully use financial leverage in the current year? (b) Did Clay?
Business
1 answer:
Paladinen [302]3 years ago
4 0

Answer:

<h3>Required:</h3>

1. (a) Which company has the better profit margin? (b) Which has the better asset turnover? (c) Which has thebetter return on assets?

2. Which company has the better rate Of growth in sales?

3. (a) Did Roak successfully use financial leverage in the current year? (b) Did Clay?

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Answer:

Asset U

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Reward-to-volatility ratio for Asset U = 8.8% / 5.5%

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Reward-to-volatility ratio for Asset B = Expected return / standard deviation

Reward-to-volatility ratio for Asset B = 8.8% / 6.5%

Reward-to-volatility ratio for Asset B = 1.3538

The  investor should prefer Asset U because its has the highest reward to volatility ratio among the three options.

8 0
3 years ago
TB MC Qu. 6-101 Data concerning Bedwell Enterprises ... Data concerning Bedwell Enterprises Corporation's single product appear
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Answer:

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3 years ago
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Answer:

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Explanation:

Giving the following information:

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3 years ago
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Discuss the rationale of organizing an industrial strike in resolving employee dispute with the state, focusing on the detrimental effects strikes has on various stakeholders in an economy

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