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Rolf Company and Kent Company are similar firms that operate in the same industry. Kent began operations in 2011 and Rolf in 2008. In 2013, both companies pay 7% interest on their debt to creditors. T
Rolf Company and Kent Company are similar firms that operate in the same industry. Kent began operations in 2011 and Rolf in 2008. In 2013, both companies pay 7% interest on their debt to creditors. The following additional information is available.
Rolf COMPANY Kent COMPANY
2013 2012 2011 2013 2012 2011
Total asset turnover . . . . . . 3.0 2.7 2.9 1.6 1.4 1.1
Return on total assets . . .. 8.9% 9.5% 8.7% 5.8% 5.5% 5.2%
Profit margin . . . . . . . . .. 2.3% 2.4% 2.2% 2.7% 2.9% 2.8%
Sales . . . . . . . . . . . . . . … $400,000 $370,000 $386,000 $200,000 $160,000 $100,000
Compare Rolf and Kent using the available information. Their ability to use assets efficiently to produce profits. Also comment on their success in employing financial leverage in 2013.
