Question

s e s national is considering a olne The try to g et r id or productos de ons based on with and without the new products out the co very excited ab company's CFO, has provided the following We New Prats $11, 0 00 37, 14000 rage Botas $5.824.00 um (a) Compute the company return on p rofit magand Without new products with new products

Answer 1

| Without new products 71% Return on assets Profit margin Assets turnover With new products 71% 5.01% 1.2 times 31% 2.0 times Working Notes: Return on assets = Net Income / Average Total assets Without new products Return on assets = $400,900/$5,874,900 = 7% with new products Return on assets = $915,800/$13,914,900 = 7% Profit Margin = Net Income /Net Sales Without new products Profit matrgin = $400,900/$11,934,600 = 3% with new products Profit matrgin = $915,800/$17,143,000 = 5% Assets Turnover = Net Sales / Average Total assets Without new products Assets Turnover = $11,934,600/$5,874,900 = 2.0 Times with new products Assets Turnover = $17,143,000/$13,914,900 = 1.2 Times