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Information about two video game companies was recently taken from te companies' annual reports. Virtual Videos and Games Galore both have an income tax rate of 34% and the following is the information collected from the two stores (amounts in thousands):

Virtual Videos Games Galore

Sales $15,134 $20,143

Interest Expense 80 150

Net Income 524 982

Average total assets 3,048 7,125

Required:

Calculate the return on assets, return on sales and asset turnover for both companies. What can you tell about each company on the basis of these ratios?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9947237

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