Titus Corporation and Vane Corporation, two companies of roughly the same size,

Question

Titus Corporation and Vane Corporation, two companies of roughly the same size, are both involved in the manufacture of shoe-tracing devices. Each company depreciates its plant assets using the straight-line approach. An investigation of their financial statements reveals the following information.


Titus Corp. Vane Corp.
Net income $257,430 $366,740
Sales 1,437,210 1,299,350
Total assets (average) 3,413,490 3,369,790
Plant assets (average) 2,555,240 1,803,380
Intangible assets (goodwill) 447,740 0

For each company, calculate these values: (Round return on assets ratio and profit margin to 1 decimal place, i.e. 5.2. Round asset turnover ratio to 2 decimal places, i.e. 0.25)

 

i know how to calculate them, it's just the rounding

Explanation / Answer

Titus Corporation: Return on assets ratio =Net Income/ Average total assets                                   =$257,430/3,413,490                                   =0.0754                                    =0.08                                    =8% Profit margin ratio = Net Income/Net Sales                             = $257,430/1,437,210                             = 0.1791                              =0.2                               =20% Vane Corporation: Return on assets ratio = Net Income/Average total assets                                   =$366,740/3,369,790                                   = 0.1088                                   =0.11                                    =11% Profit margin ratio= Net Income/Net Sales                            = $366,740/1,299,350                             =0.2822                             =0.3                              =30% Note : Rounding off number : If the next number is more than 5 then we can added 1 to its preceding number to round off to nearest decimal place value. Return on assets ratio =Net Income/ Average total assets                                   =$257,430/3,413,490                                   =0.0754                                    =0.08                                    =8% Profit margin ratio = Net Income/Net Sales                             = $257,430/1,437,210                             = 0.1791                              =0.2                               =20% Vane Corporation: Return on assets ratio = Net Income/Average total assets                                   =$366,740/3,369,790                                   = 0.1088                                   =0.11                                    =11% Profit margin ratio= Net Income/Net Sales                            = $366,740/1,299,350                             =0.2822                             =0.3                              =30% Note : Rounding off number : If the next number is more than 5 then we can added 1 to its preceding number to round off to nearest decimal place value.

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