Question: autocool repairs and hotwheel services are two automobile servicing and...
Autocool Repairs and Hotwheel Services are two automobile servicing and repair businesses that are competitors in the suburb of Caulfield, Victoria. For the year ending 2019, both businesses show a return on assets of 33%. Autocool Repairs has reported total assets of $250,000 while Hotwheel Services has reported total assets of $1,350,000. Answer the questions below based on the information given about Autocool Repairs and Hotwheel Services:
5a) Explain the meaning of the return on assets ratio for both businesses, identifying which business is performing better. [4 marks]
5b) Explain whether a return on assets ratio of 33% is favourable. [4 marks]
5c) Explain how the return on assets ratio differs from the asset turnover ratio. [4 marks]