Companies in the tire manufacturing business use a lot of property, plant, and equipment. Tyrell Rubber and Tire Corporation and Maxwell Rubber and Tire Manufacturing are two of the leading manufacturers. In additiion, Maxwell also operates over 1,000 tire service center outlets. Tyrell Rubber & Tire Maxwell Rubber & Tire Sales $2,918 $15,585 Depreciation and depletion costs 185 950 Property, plant, and equipment (net of accumulated depreciation) 976 6,146 Total assets 2,633 16,982 Depreciation method Straight-line Straight-line Depletion method Units of production Units of production Estimated life of assets Buildings 10 to 40 years 3 to 45 years Machinery and equipment 2 to 14 years 3 to 40 years Net income $105 $875 Required a .Calculate depreciation costs as a percentage of sales for each company. b.Calculate property, plant, and equipment as a percentage of total assets for each company. c.Based only on the percentages calculated in Requirements a and b, which company appears to be using its assets most efficiently? d.Calculate the return-on-assets ratio for each company. Based on this ratio, which company appears to be using its assets most efficiently?
Companies in the tire manufacturing business use a lot of property, plant, and equipment. Tyrell Rubber and Tire Corporation and Maxwell Rubber and Tire Manufacturing are two of the leading manufacturers. In additiion, Maxwell also operates over 1,000 tire service center outlets. Tyrell Rubber & Tire Maxwell Rubber & Tire Sales $2,918 $15,585 Depreciation and depletion costs 185 950 Property, plant, and equipment (net of accumulated depreciation) 976 6,146 Total assets 2,633 16,982 Depreciation method Straight-line Straight-line Depletion method Units of production Units of production Estimated life of assets Buildings 10 to 40 years 3 to 45 years Machinery and equipment 2 to 14 years 3 to 40 years Net income $105 $875 Required a .Calculate depreciation costs as a percentage of sales for each company. b.Calculate property, plant, and equipment as a percentage of total assets for each company. c.Based only on the percentages calculated in Requirements a and b, which company appears to be using its assets most efficiently? d.Calculate the return-on-assets ratio for each company. Based on this ratio, which company appears to be using its assets most efficiently?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Companies in the tire manufacturing business use a lot of property, plant, and equipment. Tyrell Rubber and Tire Corporation and Maxwell Rubber and Tire Manufacturing are two of the leading manufacturers. In additiion, Maxwell also operates over 1,000 tire service center outlets.
Tyrell Rubber & Tire Maxwell Rubber & Tire
Sales $2,918 $15,585
Depreciation and depletion costs 185 950
Property, plant, and equipment (net of accumulated depreciation ) 976 6,146
Total assets 2,633 16,982
Depreciation method Straight-line Straight-line
Depletion method Units of production Units of production
Estimated life of assets
Buildings 10 to 40 years 3 to 45 years
Machinery and equipment 2 to 14 years 3 to 40 years
Net income $105 $875
Required
a .Calculate depreciation costs as a percentage of sales for each company.
b.Calculate property, plant, and equipment as a percentage of total assets for each company.
c.Based only on the percentages calculated in Requirements a and b, which company appears to be using its assets most efficiently?
d.Calculate the return-on-assets ratio for each company. Based on this ratio, which company appears to be using its assets most efficiently?
Transcribed Image Text:(Enter your answers as a percentage rounded to 1 decimal place (i.e., 0.123 should be entered as 12.3).)
a.
Depreciation expense
b. Property, plant, and equipment
C.
Which company appears to be using its assets most efficiently?
d-1. Return-on-assets ratio
d-2. Which company appears to be using its assets most efficiently?
Tyrell Rubber & Maxwell Rubber
Tire
& Tire
%
%
%
%
%
%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
Expert Answers to Latest Homework Questions
Q: A 5 kg steel ball strikes a massive wall at 11 m/s at an angle of 21 degrees with the plane of the…
Q: When does a company decide to replace an existing asset?
Multiple choice question.
When the…
Q: Which of the following cases involve(s) discounted cash flow analysis? More than one answer may be…
Q: Which of the following cash flows are added to the present value of operating cash flows to make a…
Q: What is the treatment of a difference between the salvage value and UCC of an asset when the asset…
Q: A company can enhance productivity by Blank______.
Multiple choice question.
replacing existing…
Q: The formula for calculating the present value of the tax shield on capital cost allowance (CCA)…
Q: True or false: The replacement decision of an existing asset cannot be taken using the discounted…
Q: Negative NPV.
Multiple IRRs.
Non-existent IRR.
Negative profitability index.
Q: MC algo 9-27 Calculating NPV
Living Colour Company has a project available with the following cash…
Q: MC algo 9-21 Calculating Profitability Index
POD has a project with the following cash flows:…
Q: Abbas is an astronaut, floating in space. Their rocket is powered by throwing rocks out of a hole in…
Q: MC algo 9-6 Calculating AAR
Mountain Frost is considering a new project with an initial cost of…
Q: A frictionless ski jump is designed such that at the bottom of the hill, there is a short flat…
Q: MC algo 9-6 Calculating AAR
Mountain Frost is considering a new project with an initial cost of…
Q: MC algo 9-3 Calculating Payback Period
There is a project with the following cash flows :
Year…
Q: A company is considering automating an existing manual process by buying a new equipment worth…
Q: When an asset is sold, the difference between its salvage value and ending UCC remains in the asset…
Q: In which of the approaches of calculating operating cash flows do we start with the net income and…
Q: The present value of the tax shield on CCA formula is based on the idea that tax shields from CCA…
Q: Which of the following cases involve(s) discounted cash flow analysis? More than one answer may be…