Business, 04.04.2020 00:04 Kikilcaro9675

LaPorta Company and Lott Corporation, two corporations of roughly the same size, are both involved in the manufacture of in-line skates. Each company depreciates its plant assets using the straight-line approach. An investigation of their financial statements reveals the following information.

LaPorta Co. Lott Corp.
Net income $800,000 $1,000,000
Sales revenue 1,300,000 1,180,000
Average total assets 2,500,000 2,000,000
Average plant assets 1,800,000 1,000,000
(a) For each company, calculate the asset turnover. (Round answers to 2 decimal places, e. g. 0.60.)

LaPorta Co. Lott Corp.
Asset turnover times times
(b) Based on your calculations in part (a), comment on the relative effectiveness of the two companies in using their assets to generate sales and produce net income. (Round answer to 2 decimal places, e. g. 52.75%.) Based on asset turnover, is more effective in using assets to generate sales. Its asset turnover is % higher than .

Answers: 1

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