Roak Company and Clay Company are similar firms that operate in the same industry. Clay began operations two years ago and Roak started five years ago. In the current year, both companies pay 6% interest on their debt to creditors. The following additional information is available.

  

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IIIIII Roak Company 1 Yr Ago Clay Company Current Yr 1 Yr Ago Current Yr 2 Yrs Ago 2 Yrs Ago Total asset turnover 4.9 4.6 4.8 3.3 3.3 2.9 Return on total assets 9.0% 13.24 13.84 5.9% 5.64 5.34 Profit margin ratio Sales 4.24 4.3% 4.18 6.4 6.64 6.5% $500,000 $470,000 $486,000 $300,000 $260,000 $200,000 1. (a) Which company has the better profit margin? (b) Which has the better asset turnover? (c) Which has the better 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 (a) Which company has the better profit margin? (b) Which has the better asset turnover? (c) Which has the better return on assets? (a) Which company has the better profit margin? (b) Phich has the better asset turnover? (c) Which has the better return on assets? IIIIII Roak Company 1 Yr Ago Clay Company Current Yr 1 Yr Ago Current Yr 2 Yrs Ago 2 Yrs Ago Total asset turnover 4.9 4.6 4.8 3.3 3.3 2.9 Return on total assets 9.0% 13.24 13.84 5.9% 5.64 5.34 Profit margin ratio Sales 4.24 4.3% 4.18 6.4 6.64 6.5% $500,000 $470,000 $486,000 $300,000 $260,000 $200,000 1. (a) Which company has the better profit margin? (b) Which has the better asset turnover? (c) Which has the better 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 (a) Which company has the better profit margin? (b) Which has the better asset turnover? (c) Which has the better return on assets? (a) Which company has the better profit margin? (b) Phich has the better asset turnover? (c) Which has the better return on assets?

Answer rating: 100% (QA)

Requirement 1 a Better profit margin Clay company Although the sales are le... View the full answer