Question

Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below:

Sales	$	17,100,000
Net operating income	$	5,300,000
Average operating assets	$	36,200,000

Required:

1. Compute the margin for Alyeska Services Company. (Round your answer to 2 decimal places.)

2. Compute the turnover for Alyeska Services Company. (Round your answer to 2 decimal places.)

3. Compute the return on investment (ROI) for Alyeska Services Company. (Round your intermediate calculations and final answer to 2 decimal places.)

Answer 1

1. Margin = Net operating income / Sales
Margin = 5,300,000 / 17,100,000 = 30.99%
2. Turnover = Sales/ Average operating assets
Turnover = 17,100,000 / 36,200,000 = 0.47
3. ROI = Margin * Turnover
ROI = 30.99% * 0.47 = 14.57%
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