Question

Wildhorse Co. reports the following information (in millions) during a recent year: net sales, $10,959.9; net earnings, $429.8; total assets, ending, $5,070.0; and total assets, beginning, $5,675.0. (a) Calculate the (1) return on assets, (2) asset turnover, and (3) profit margin. (Round answers to 1 decimal place, e.g. 6.2% and 6.2.)

I need the following help.

return on assets in %

asset turnover  

and profit margin

Answer 1

total assets, ending = $5,070

total assets, beginning = $5,675

net earnings = $429.80

Net sales = $10,959.90

Average total assets =  (total assets, beginning+ total assets, ending)/2

= (5,675+5,070)/2

= $5,372.5

1.

Return on assets = Net earnings / Average total assets

= 429.8/5,372.5

= 8%

2.

Asset turnover = Net sales / Average total assets

= 10,959.9/5,372.5

= 2.0 times

3.

Profit margin = Net earnings/ Net sales

= 429.8/10,959.9

= 3.9%

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