Dollarama Inc. and Hudson's Bay Company are two competitors in the retail industry. They reported the following information in 2015 (in millions of dollars):
____________________Dollarama__________Hudson's Bay
Total assets, 2015..............$1,567...............................$7,942
Total assets, 2014................1,701.................................9,072
Net sales, 2015....................2,331.................................8,169
Net income, 2015...................295....................................238
Industry averages are as follows: profit margin, 0.9%; asset turnover, 1.6 times; and return on assets, 1.4%.
Instructions
(a) For each company, calculate the profit margin, asset turnover, and return on assets ratios for 2015.
(b) Based on your calculations in part P9.11B(a), comment on how effectively each company is using its assets to generate sales and earn net income.
(c) What additional information about long-lived assets would assist you in your comparison of these two companies?