Mock Orange Company and Cotoneaster Company both manufacture pruning shears. The following financial information is for three
Question:
Mock Orange Company and Cotoneaster Company both manufacture pruning shears. The following financial information is for three years ended December 31 (in thousands):
Instructions
a. Calculate the asset turnover and return on assets ratios for both companies for 2020 and 2021. Round your answers to two decimal points.
b. Comment on how effective each of the companies is at using its assets to generate sales and produce profit.
After reading the notes to the financial statements, you have determined that Mock Orange Company uses straight-line depreciation and Cotoneaster uses diminishing balance. Does this affect your ability to compare these two companies?
Asset TurnoverAsset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.
Step by Step Answer:
a in thousands b Mock Orange Company is more efficient in using its assets to generate salesits asse...View the full answer
Accounting Principles Volume 1
ISBN: 978-1119502425
8th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
