FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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
%
%
%
%
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