The numbers below are for Iffy Company and Model Company for the year 2003:
|
Iffy |
Model |
|
|
Cash |
$00,120 |
$00,900 |
|
Accounts receivable. |
600 |
4,500 |
|
Inventory |
480 |
6,000 |
|
Property, plant, and equipment |
3,440 |
15,000 |
|
Total liabilities . |
3,190 |
18,150 |
|
Stockholders equity |
1,450 |
8,250 |
|
Sales |
10,000 |
75,000 |
|
Cost of goods sold |
9,200 |
66,750 |
|
Wages expense. |
700 |
5,250 |
|
Net income. |
100 |
3,000 |
1. Compute return on equity, profit margin, asset turnover, and the assets to equity ratio for both Iffy and Model.
2. Briefly explain why Iffy s return on equity is lower than Model s.