9.Information is provided below for two companies:
(in thousands)JohnsonLyndon
Sales$14,000$45,000
Net income6002,700
Total stockholders' equity5,6009,000
Total assets7,00010,000
Required:
a.Compute asset turnover, profit margin, return on assets, and return on equity for each company.
b.Compare the companies' performance.
10.Windpower Corporation's management has decided to invest $8 million in production facilities with the capacity to produce 800,000 units per year. Variable expenses will be $8 per unit. Fixed expenses will be $2,400,000 per year. The firm has developed two sales scenarios for the coming year:
a.At a price of $12, below most of the competition, sales will be 700,000 units.
b.At a price of $18, sales will be 400,000 units.
Required:
Develop a schedule showing profit from both scenarios. Which would you recommend? Why?