Selected Information for Uptown Spa Services and Downtown Spa Services

question 242

Essay

Selected information for Uptown Spa Services and Downtown Spa Services follows:
$\begin{array}{c}\begin{array}{|l|l|}\hline\text { Uptown Spa } & \\\text { Services } & \\\hline \text { Total Assets } & \$ 125,000 \\\hline \text { Total } & \\\text { Stockholders' } & \\ \text { Equity } &\$ 90,000 \\ \hline \text { Total Revenues } &\$ 82,000\\\hline\text { Net Income } & \$ 12,000\\\hline\end{array}\begin{array}{|l|r|}\hline \begin{array}{l}\text { Downtown Spa } \\\text { Services }\end{array} & \\\hline \text { Total Assets } & \$ 162,000 \\\hline \text { Total } & \\\text { Stockholders' } & \\\text { Equity } & \$ 137,000 \\\hline \text { Total Revenues } & \$ 70,000\\\hline\text { Net Income } & \$ 18,000\\\hline \end{array}\end{array}$ The total assets and total stockholders' equity balances are at December 31, 2018. Total revenues and net income are for the year ended December 31, 2018. No dividends were paid. Average net assets are $128,000 for Uptown and $178,000 for Downtown.
Provide answers for the following questions. Show your work and explain your answer.
1. Which business owes more to creditors?
2. Which business has more stockholders' equity at the end of the year?
3. Which business had more expenses?
4. What is the ROA for each business? (Show this as a percentage and round to one decimal place) Based on ROA, which company is more profitable?

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Definitions:

Deposited

Placing money into a financial account or institution for safekeeping or investment purposes.

Collection Float

The time period between when a check is deposited and when the funds are available in the payee’s account, reflecting the bank’s processing time.

Banking System

denotes the network of institutions that provide financial services, including deposits, loans, and currency exchanges.