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Question: autocool repairs and hotwheel services are two automobile servicing and...

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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]

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