Garden Company has the capacity to produce 200,000 tillers. Variable costs are $30 per tiller. Fixed costs are $1,500,000. Should the company aim to sell 200,000 at $100 each, 160,000 at $125 each, or 125,000 at $160 each? Explain your recommendation. What will the company have to do to carry out the strategy you recommend? Three companies have the following financial results:
|
Company A |
Company B |
Company C |
|
|
Profit margin |
0.05 |
0.4 |
0.25 |
|
Asset turnover |
6 |
0.75 |
1.2 |
|
Return on assets |
30% |
30% |
30% |
What can you conclude about the financial results and the operating strategy of each company?