3.Information is presented below for two companies:
(in thousands)San MartinShaquil
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?