use the total assets turnover ratios you computed for rational software as an exampl 625185

Currently, many corporations are looking for acquisition opportunities. Tyre, Inc., is trying to decide whether to buy Amite Company or Beauman Company. Tyre, Inc., has hired you as a consultant to analyze the two companies” financial information and to determine the more advantageous aquisition. Your review of the companies” books has revealed that both Amite and Beauman have assets with the following book values and fair market values:

Liabilities assumed on the purchase of either company include accounts payable, USD 300,000, and notes payable, USD 75,000. The only difference between the companies is that Amite has net income that is about average for the industry, while Beauman”s net income is greatly above average for the industry. Top-level management at Tyre, Inc., has asked you to respond in writing to the following possible situations:

a. Assume Tyre, Inc., can buy Amite Company for USD 2,700,000 or Beauman Company for USD 3,450,000. Prepare the journal entries to record the acquisition of Amite Company and Beauman Company. What accounts for the difference between the purchase price of the two companies?

b. Assume Tyre, Inc, can buy either company for USD 2,700,000. Write a report for Tyre, Inc., advising which company to buy. Annual report analysis C The mission of Rational Software Corporation is to ensure the success of customers constructing the software systems that they depend on. Using the following excerpts from Rational Software”s annual reports, calculate the firm”s total assets turnover for 2004 and 2003. (Amounts are in USD thousands.)

In a written report, discuss the meaning of the total assets turnover ratio and what the ratio means to management and investors. Use the total assets turnover ratios you computed for Rational Software as an example in your report.