Question

that the new products will bring The new products are a significant step up in quality above the company's current offerings, but offer a complementary fit to its existing product line. Fred Riddick, senior production department manager, is very excited about the high-tech new equipment that will have to be acquired to produce the new products. Barbara Dyson, the company's CFO, has provided the following projections based on results with and without the new products. ER Without New With New Products Products Sales revenue rd $12,366.225 $15,774,850 Net income $494,649 $946,491 Average total assets $5,496,100 $13,521,300 (a) Compute the company's return on assets, profit margin, and asset turnover, both with and without the new product line. (Round answers to O decimal places, eg 2 % and asset tunover to 1 decimal place, eg 6.2) Without new products With new products Return on assets 009 % 007 % Profit margin I% Asset turnover eTextbook and Media Attemntr: 1 of 2

Answer 1

With New Product Answers without New Prodcut 9% 4% 2.3 Return on Assets Profit Margin Turnover 7% 6% 1.2

without New With New Prodcut Product Sales 12366225 15774850 Average Opearating Assets 5496100 13521300 Net operating income 494649 946491 Margin : Net operating Income / Net sales Net operating income 494649 946491 Sales 12366225 15774850 Profit Margin 4.00% 6.00% Assets Turnover ratio : Netsales Average Opearating Assets Sales 12366225 15774850 Average Operating Assets 54961001 13521300 Assets Turnover ratio : 2.25 1.17 ROA : Margin * Asset Turnover ratio Margin 4.00% 6.00% Assets Turnover ratio : 2.25 1.166666667 ROA: 9.00% 7.00%