James builds brick walls for custom homes. His annual sales are approxi-mately $300,000, and his net income is $18,000. He has assets of $100,000 invested in this business. Tom sells window shades. His annual sales are approximately $900,000, and his net income is $27,000. He has assets of $150,000 invested in his business. Compute the net profit margin for both James and Tom. Compute the asset turnover for both James and Tom. Compare the profitability of these two firms, and discuss the similarities and differences.
James builds brick walls for custom homes. His annual sales are approxi-mately $300,000, and his net income is $18,000. He has assets of $100,000 invested in this business. Tom sells window shades. His annual sales are approximately $900,000, and his net income is $27,000. He has assets of $150,000 invested in his business. Compute the net profit margin for both James and Tom. Compute the asset turnover for both James and Tom. Compare the profitability of these two firms, and discuss the similarities and differences.
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter11: Individuals As Employees And Proprietors
Section: Chapter Questions
Problem 4CE
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James builds brick walls for custom homes. His annual sales are approxi-mately $300,000, and his net income is $18,000. He has assets of $100,000 invested in this business. Tom sells window shades. His annual sales are approximately $900,000, and his net income is $27,000. He has assets of $150,000 invested in his business.
- Compute the net profit margin for both James and Tom.
- Compute the asset turnover for both James and Tom.
- Compare the profitability of these two firms, and discuss the similarities and differences.
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