3 information is presented below for two companies in thousands san martinshaquil op 4352276

3.Information is presented below for two companies:

(in thousands)San MartinShaquil

Operating revenues$1,875$1,250

Net income450150

Total assets2,5001,000


a.Compute profit margin, asset turnover, and return on assets for each firm.

b.Compare the operating strategies of both firms and explain which is doing a better job with its strategy.

4.Steamer Corporation's management has decided to invest $3.0 million in production facilities with the capacity to produce 500,000 units per year. Variable expenses will be $4 per unit. Fixed expenses will be $1,600,000 per year. The firm has developed two sales scenarios for the coming year:

a.At a price of $10, below most of the competition, sales will be 400,000 units.

b.At a price of $14, sales will be 200,000 units.


Develop a schedule showing profit from both scenarios. Which would you recommend? Why?

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