Corelle Padron Total assets $160,000 $300,000 Sales 140,000 540,000 Fixed costs
ID: 2452180 • Letter: C
Question
Corelle Padron
Total assets $160,000 $300,000
Sales 140,000 540,000
Fixed costs 70,000 378,000
Other expenses* 42,000 108,000
Net income $28,000 $54,000
*Vary in proportion to sales
A, Compute profit margin, asset turnover, and return on assets.
B. Compute the same as A for both firms if sales increased by 10%
C. Compute the same as A for both firms if sales decreased by 10%
Explanation / Answer
Current Corelle Pardon Total Assets 1,60,000.00 3,00,000.00 Sales 1,40,000.00 5,40,000.00 Fixed Expense 70,000.00 3,78,000.00 Other Expense 42,000.00 1,08,000.00 Net Income 28,000.00 54,000.00 Profit margin Net income/Sale 20.0% 10.0% Asset Turnover Sales/Assets 0.875 1.8 ROA Profit Margin* Asset Turnover 18% 18% 10 % increase in sales Corelle Pardon Total Assets 1,60,000.00 3,00,000.00 Sales 1,54,000.00 5,94,000.00 Fixed Expense 70,000.00 3,78,000.00 Other Expense 46,200.00 1,18,800.00 Net Income 37,800.00 97,200.00 Profit margin Net income/Sale 24.5% 16.4% Asset Turnover Sales/Assets 0.9625 1.98 ROA Profit Margin* Asset Turnover 24% 32% 10 % Decrease in sales Corelle Pardon Total Assets 1,60,000.00 3,00,000.00 Sales 1,26,000.00 4,86,000.00 Fixed Expense 70,000.00 3,78,000.00 Other Expense 37,800.00 97,200.00 Net Income 18,200.00 10,800.00 Profit margin Net income/Sale 14.4% 2.2% Asset Turnover Sales/Assets 0.7875 1.62 ROA Profit Margin* Asset Turnover 11% 4%