Question

A company had net income of $86,000 in Year 1 and $118,000 in Year 2. Its net sales were $640,000 in Year 1 and $611,000 in Year 2. Its average total assets in Year 1 were $1,670,000 and $1,712,000 in Year 2. Calculate the profit margin, total asset turnover and return on total assets for both years. Comment on the results.

Answer #1

1) Asset Turnover = Net sales / Average total asset

Year-1: 640,000 / 1,670,000 = 0.38 times

Year-2: 611,000 / 1,712,000 = 0.36 times

The higher asset turnover ratio indicates that the company is using the resources efficiently

2) Return on total assets = Net income / Average total assets

Year-1: 86,000 / 1,670,000 = 0.05 or 5.15%

Year-2: 118,000 / 1,712,000 = 0.07 or 6.89%

ROA's above 5% are usually are considered to be efficient

3) Profit margin = ROA / Asset Turnover

Year-1: 0.05 / 0.38 *100 = 13.16%

Year-2: 0.07 / 0.36 * 100 = 19.44%

The profit margin of 10% is considered to be average while the profit margin of nearly 20% is considered to be good

Brief Exercise 11-10
In its 2017 annual report, Campbell Soup
Company reports beginning-of-the-year total assets of
$7,837 million, end-of-the-year total assets of $7,726 million,
total sales of $7,890 million, and net income of $887 million.
Compute Campbell’s asset turnover. (Round answer to
4 decimal places, e.g. 4.8726.)
Asset turnover
enter asset turnover in times rounded to 4 decimal places
times
LINK TO TEXT
Compute Campbell’s profit margin on sales. (Round
answer to 2 decimal places, e.g. 4.87%.)
Profit margin on...

Crane Company reports the following information (in millions)
during a recent year: net sales, $10,177.2; net earnings, $246.7;
total assets, ending, $5,130.0; and total assets, beginning,
$5,150.0.
(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.)
1.
Return on assets
enter the return on assets in
percentages rounded to 1 decimal places
%
2.
Asset turnover
enter the asset turnover
rounded to 1 decimal places...

Question 1
1a) A company has $1 billion of sales
and $50 million of net income. Its total assets are $500
million, financed half by debt and half by common
equity. What is its profit margin? What is
its ROA?
4
Sales ($M)
Net income ($M)
Total assets ($M)
Debt ratio
Profit margin
Sales ($M)
Net income ($M)
Total assets ($M)
Debt ratio
ROA
1b) A company has a profit margin of
6%, a total asset turnover ratio of 2, and an equity...

The Stars Company had net income in 2019 of AED 18 million. Here
are some of the financial ratios from the annual report.
Profit Margin = 5%
Return on Assets = 8%
Debt Assets Ration = 45%
Using these ratios, calculate the following for the Sun Company:
a) Sales
b) Total assets
c) Total asset turnover
d) Total debt
e) Stockholders' equity
f) Return on equity
2.A firm has sales of AED 500 million, and 10 percent of the
sales...

QUESTION 11
What is return on assets?
It is net income / total equity.
It is sales / total assets.
It is net income / total assets.
It is sales / total equity.
1 points
QUESTION 12
Nvidia has the net profit margin of 32.20% while the industry
average net profit margin is 13.51%. Based on the findings,
Nvidia underperforms its peers in terms of leverage.
Nvidia underperforms its peers in terms of profitability.
Nvidia outperforms its peers in...

Calculate the Return on Assets (ROA) for the following company
results:
2019
Net Sales
$10,358,000
Net Income*
935,000
Average Total Assets
8,376,000
*Assume there are no non-recurring
items or non-controlling interests
6. Net Profit
Margin
__________________ / ____________ =
_____________
7. Total Asset
Turnover
__________________ / ____________ =
_____________
8. Return on Assets (DuPont) __________________ X ____________ =
_____________
9. Compare &
Interpret:
a) To answer this question: “If the
company expects a ROA of 14%, has the company met...

In its 2020 annual report, Headlands Limited reports
beginning-of-the-year total assets of $2,308 million,
end-of-the-year total assets of $2,182 million, total revenue of
$2,355 million, and net income of $150 million.
Calculate Headlands's asset turnover ratio. (Round
answer to 2 decimal places, e.g. 52.75.)
Asset turnover ratio
enter Asset turnover ratio in times times
Link to Text
Calculate Headlands's profit margin. (Round answer
to 2 decimal places, e.g. 52.75%.)
Profit margin
enter Profit margin in percentages %
Link to Text...

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

Travel Corp. has net income of $2 million, an effective tax rate
of 35%, interest expense of $400,000, sales of $30 million, and $15
million in total assets, of which $5 million is debt. Use the
DuPont system to calculate its ROE, decomposed into leverage ratio,
asset turnover, profit margin, and debt burden.
profit margin = ??
asset turnover = ??
equity multiplier = ??
return on equity = ??

Net income divided by average total assets is:
Question 50 options:
Profit margin.
Total asset turnover.
Return on total assets.
Days' income in assets.
Current ratio.

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