Question

Following are data for BioBeans and GreenKale, which sell organic produce and are of similar size. Average total assets Net sales Net income BioBeans GreenKale $227,500 $174,000 115,000 69,600 11,375 2,800 Required: 1a. Compute the profit margin for both companies. 1b. Compute the return on total assets for both companies. 2. Based on analysis of these two measures, which company is the preferred investment? Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Required 2 Based on analysis of these two measures, which company is the preferred investment? Preferred investment company is Reg 1B Required 2

Answer 1

Note : As it is not mentioned so answers are calculated upto two decimals point

Answer 1A	Profit Margin
	BioBeans	9.89%
	GreenKale	4.02%
Answer 1A	Return on total assets
	BioBeans	5.00%
	GreenKale	1.61%
Answer 2	Preferred investment company is	BioBeans

Detailed workings as following

Calculations
	BioBeans
	Average total assets		$227500
	Net sales		115000
	Net income		11375
	GreenKale
	Average total assets		$174000
	Net sales		69600
	Net income		2800
BioBeans	Profit margin	Net income	=	11375	9.89%
		Net sales		115000
GreenKale	Profit margin	Net income	=	2800	4.02%
		Net sales		69600
BioBeans	Return on assets	Net income	=	11375	5.00%
		Average total assets		227500
GreenKale	Return on assets	Net income	=	2800	1.61%
		Average total assets		174000

.

As profit margin and return on assets on BioBeans both are more than that of Greenkale so preferred investment company is BioBeans

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