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Item 8

Item 8 2.5 points

Executive Jets, LLC operates a charter flight-service company in the northwestern United States. Classic Steps, LLC is a company that provides dancing lessons to students of all ages. Classic Steps has dance studios in several cities throughout the western United States. The following data are from the companies most recent financial statements but are not identified as to which company they relate.

	Company 1			Company 2
Sales	$	10,000,000		$	10,000,000
Depreciation expense		70,000			500,000
Net earnings		850,000			800,000
Current assets		950,000			900,000
Property, plant, and equipment		700,000			6,000,000
Total assets		2,500,000			7,900,000

Required a. Calculate the ratio of sales to property, plant, and equipment for each company. b. Based on the ratios calculated in requirement a, decide which is the equipment rental company and which is the tax and accounting business. c. Based on the ratios calculated in requirement a, which company appears to be using its property, plant, and equipment more efficiently?