The following information is provided for Nguyen Company and Northwest Corporation. $$\begin{array} { l c c }
{ \text { (in } \$ \text { millions) } } & \text { Nquyen Company } & \text { Northwest Corporation } \
\hline \text { Net income } 2022 & \$ 165 & \$ 420 \
\text { Net sales } 2022 & 1,650 & 4,900 \
\text { Total assets } 12 / 31 / 20 & 1,000 & 2,400 \
\text { Total assets } 12 / 31 / 21 & 1,050 & 3,000 \
\text { Total assets } 12 / 31 / 22 & 1,150 & 4,000
\end{array}$$ If Nguyen and Northwest are in the same industry and the industry average for asset turnover is equal to 1.20 times which of the following statements is true?
A)Only Nguyen is operating more efficiently than the industry.
B)Northwest is operating more efficiently than Nguyen.
C)Both Nguyen and Northwest are operating more efficiently than the average company in their industry.
D)The asset turnover does not address the question of efficient operations.

Question

The following information is provided for Nguyen Company and Northwest Corporation. $$\begin{array} { l c c } 
 { \text { (in } \$ \text { millions) } } & \text { Nquyen Company } & \text { Northwest Corporation } \
\hline  \text { Net income } 2022 & \$ 165 & \$ 420 \
\text { Net sales } 2022 & 1,650 & 4,900 \
\text { Total assets } 12 / 31 / 20 & 1,000 & 2,400 \
\text { Total assets } 12 / 31 / 21 & 1,050 & 3,000 \
\text { Total assets } 12 / 31 / 22 & 1,150 & 4,000
\end{array}$$ If Nguyen and Northwest are in the same industry and the industry average for asset turnover is equal to 1.20 times which of the following statements is true?
A)Only Nguyen is operating more efficiently than the industry.
B)Northwest is operating more efficiently than Nguyen.
C)Both Nguyen and Northwest are operating more efficiently than the average company in their industry.
D)The asset turnover does not address the question of efficient operations.

Quizplus · Accepted Answer

Nguyen's asset turnover is 165/1150 = 0.143 and Northwest's asset turnover is 420/4000 = 0.105. Both are greater than the industry average of 1.20 times.

The Following Information Is Provided for Nguyen Company and Northwest