Question

Given the following information: Use Figure 2.3.

Categories               Values

Sales                        $ 33,600,000

Cost of goods sold   $ 21,000,000

Variable expenses    $ 4,200,000

Fixed expenses        $ 6,100,000

Inventory                   $ 8,100,000

Accounts receivable $ 4,100,000

Other current assets $ 3,100,000

Fixed assets              $ 6,100,000

a. What is the net profit margin for this firm? (Round your answer to 2 decimal places.)

b. What is the asset turnover? (Round your answer to 2 decimal places.)

c. What is the return on assets? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

d. What is the size of the total assets used by the firm?

Answer 1

a) Net profit: - $33,600,000 - $21,000,000 - $4,200,000 - $6,100,000 = $2,300,000

Sales = $33,600,000 Net profit margin = Net profit/Sales = $2,300,000/$33,600,000 = 6.84%

b) Asset turnover = Sales/Total Assets = $33,600,000/ $8,100,000(inventory) + $4,100,000(accounts Recievables) + $3,100,000(Other Current Assets) + $6,100,000(Fixed Assets) = 1.57

c) Return on assets = Net profit / Total Assets

Total Assets = $8,100,000 + $4,100,000 + $3,100,000 + $6,100,000 = $21,400,000

= $2,300,000 / $21,400,000 = 0.11(rounded to 2 decimal point)

d) The size of the total assets of the firm are = $8,100,000 + $4,100,000 + $3,100,000 + $6,100,000 = $21,400,000