Lennox International Inc. makes air-conditioning, heating, and fireplace systems for residential and commercial uses, as well as commercial refrigeration equipment. Tecumseh Products Company manufactures air conditioning and refrigeration compressors, condensing units, heat pumps, and complete refrigeration systems. Select financial statement data and asset utilization ratios for each company follow.

Required:

1. Compare the asset utilization effectiveness of the two companies. Which company seems to be doing a better job?

2. How do the companies’ operating profit margins compare?

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Lennox International ($ in millions) 2012 2013 2014 Sales $2,949.4 $3,199.1 $3,367.4 0.059 2.95 4.22 1.74 0.109 3.39 0.127 3.51 ROA Current assets turnover Long-term assets turnover Total assets turnover 4.48 4.57 1.93 1.99 Tecumseh Products Company ($ in millions) 2012 2013 2014 Sales $854.7 $823.6 $724.4 ROA 0.053 (0.063) 2.59 (0.060) 2.54 Current assets turnover 2.66 Long-term assets turnover Total assets turnover 3.81 4.34 4.62 1.57 1.62 1.64