A company has sales of $640,000, net profit after taxes of $23,000, and a total asset...
A company has sales of $640,000, net profit after taxes of
$23,000, and a total asset turnover of 2.5. What is the return on
assets? Show your work.
A) 3.6%
B) 4.5%
C) 8.1%
D) 9.0%
Homework Answers
| Assets Turnover Ratio = 2.5 Times | |||
| So Average Assets of Company = Sales / Assets Turnover of Company | |||
| So Average Assets of Company = $ 640,000 / 2.5 | |||
| So Average Assets of Company = $ 256,000 | |||
| Return on Assets = Net Profit after Taxes / Average Assets of Company | |||
| Return on Assets = $ 23,000 / $ 256,000 | |||
| Return on Assets = 0.09 | |||
| Return on Assets in % = 0.09 or 9 % | |||
| Answer = Option D = 9% | |||
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