Question

xercise 9-16 Your answer is partially correct. Try again. Lymen International is considering a significant expansion to its product line. The sales force is excited about the opportunities that the new products will bring. The 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. Sales revenue Without New Products $12,333,000 $459,000 $5,251,700 with New Products 516,952,400 5867,900 $13,964,700 Net Income Average total assets decimal places, (a) Compute the company's return on assets, profit margin, and asset turnover, both with and without the new product line. (Round answers to e.g. 296 and asset turnover to 1 decimal place, e.g. 6.2) 1:05 AM

Answer 1

Solution:

Particulars	without new product	With new product
Sales revenue	$12,333,000.00	$16,952,400.00
Net income	$459,000.00	$867,900.00
Average total assets	$5,251,700.00	$13,964,700.00
Return on assets (Net income / Average total assets)	9%	6%
Profit Margin (Net income / Sales)	4%	5%
Asset turnover (Sales revenue / Average total assets)	2.3	1.2