Bennett Company Operates a Large Tour Company in Atlantic Canada

Essay

Bennett Company operates a large tour company in Atlantic Canada.Selected data from Bennett
Company for the year ended December 31, 2013, are presented below: $$\begin{array} { l r } \text { Total assets } & \$ 1,600,000 \\\text { Average total assets } & 1,750,000 \\\text { Average common shareholders' equity } & 280,000 \\\text { Net Sales } & 1,400,000 \\\text { Net earnings (including } \$ 70,000 \text { interest expense) } & 206,400 \\\text { Tax rate } & 35 \%\end{array}$$ Required:
A) Calculate the return on assets, by calculating its components, profit margin and asset turnover, for Bennett
Company for the year ended December 31, 2013.
B) Comment on the ratios you prepared in part A, assuming the following averages for the charter industry: $$\begin{array} { l l } \text { Profit margin } & 8 \% \\\text { Return on Assets } & 14 \% \\\text { Asset turnover } & 1.75 \text { times }\end{array}$$