Question

Required:

1. Firm A has a margin of 11%, sales of $520,000, and ROI of 19%. Calculate the firm's average total assets.
2. Firm B has net income of $72,000, turnover of 1.40, and average total assets of $900,000. Calculate the firm's sales, margin, and ROI.
3. Firm C has net income of $132,000, turnover of 1.91, and ROI of 24.00%. Calculate the firm's margin, sales, and average total assets.

Firm A has a margin of 11%, sales of $520,000, and ROI of 19%. Calculate the firm's average total assets. (Round "Turnover" to 1 decimal place.)

Firm B has net income of $72,000, turnover of 1.40, and average total assets of $900,000. Calculate the firm's sales, margin, and ROI. (Round "Margin" and "ROI" answers to 1 decimal place.)

Firm C has net income of $132,000, turnover of 1.91, and ROI of 24.00%. Calculate the firm's margin, sales, and average total assets. (Round "Margin" answer to 1 decimal place and use the rounded answer for the subsequent computations.)

Answer 1

Return on asset is given by net income divided by Average total assets or Profit Margin * Asset Turnover

where Profit Margin = Net income / sales and

Asset turnover = Sales / Average total assets

Firm A

Net income = 520000 * 11% = $ 57200

Average total assets = 57200 / 0.19 = $ 301053

Firm B

Sales = 1.4 * 900000 = $ 1260000

Margin = 72000 / 1260000 = 5.71%

ROI = 72000 / 900000 = 8%

Firm C

Average total assets = 132000 / 0.24 = $ 550000

Sales = 1.91 * 550000 = 1050500

Margin = 132000 / 1050500 = 12.57%