Solution-Which company provides better return on assets

Which company provides better return on assets

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Reference no: EM132465348

Problem - Below is selected financial information from the financial statements of company A and company B. Both company A and company B started their business on 1/1/2019.

	Company A	Company B
Current assets on 12/31/2019	100	8,000
Total assets on 12/31/2019	11,000	28,000
Current liability on 12/31/2019	200	4,000
Total liability on 12/31/2019	4,000	18,000
Sales revenue on 12/31/2019	4,500	20,000
Cost of goods sold for year 2019	1,000	16,000
Interest expense for year 2019	400	1,000
Net income for year 2019	1,500	2,500

Required -

a) Which company provides better return on assets?

b) Which company has less liquidity risk in terms of current ratio?

c) Which company has less solvency risk in terms of debt to total assets ratio?

Reference no: EM132465348

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Which company provides better return on assets

Reference no: EM132465348

Reference no: EM132465348

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