15.The following information is available for Vectronix Company:
(in millions)2005
Current assets$2,000
Property, plant, & equipment (net)2,500
Other long-term assets500
Current liabilities500
Long-term liabilities1,750
Common stock1,500
Retained earnings1,250
Sales10,000
Operating expenses9,600
Net income400
Required:
a.Calculate profit margin. Discuss its meaning in general and specifically for the result you calculated.
b.Calculate asset turnover. Discuss its meaning in general and specifically for the result you calculated.
16.Financial information for two companies is provided below. Both companies are in the same industry and compete for customers.
TerrextraWarping
2008200720082007
Net income$5,250,000$4,275,000$9,200,000$17,100,000
Profit margin0.120.050.040.09
Asset turnover1.251.51.251.00
Required:
a.Calculate return on assets (ROA) for each company for each year.
b.Compute the change in total assets for each company from 2007 to 2008.
c.Evaluate the performance of each company by discussing the changes from 2007 to 2008.