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Rook Company and Clay Company are similar firms that operate in the same industry, Clay...

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Accounting

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Rook Company and Clay Company are similar firms that operate in the same industry, Clay began operations 2 years ago and Roak started 5 years ago. In the current year, both companies pay 8% interest on their debt to creditors. The following additional information is available. Total asset turnover Return on total assets Profit margin ratio Sales Roak Company Current Yr 1 Yr Ago 4.4 4.1 10.84 12.2% 3.7 3.89 $475,000 $445,000 2 Yrs Ago 4.3 12.84 3.64 $461,000 Clay Company Current Yr 1 Yr Ago 2 Yrs Ago 2.8 2.8 2.4 6.99 6.64 6.34 5.49 5.64 5.54 $275,000 $235,000 $175,000 1. (a) Which company has the better profit margin? (b) Which has the better asset turnover? (c) Which has the better return on assets? 2. Which company has the better rate of growth in sales? 3. (a) Did Rook successfully use financial leverage in the current year? (b) Did Clay? (a) Which company has the better profit margin? (b) Which has the better asset turnover? (c) Which has the better return on assets? (a) (b) (C) Which company has the better profit margin? Which has the better asset turnover? Which has the better return on assets

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