Question

Question 10 Gildan Activewear Inc. reported the following selected financial information (all in U.S. $ millions): net sales of $2,415 in 2015, $2,360 in 2014, and $2,184 in 2013. The company also reported net income of $237 in 2015, $360 in 2014, and $320 in 2013. Assets at the end of 2015 were $2,911; at the end of 2014, $2,593; and at the end of 2013, $2,044. Calculate Gildan's asset turnover, profit margin, and return on assets for 2015 and 2014. (Round answers to 1 decimal place, e.g. 5.2.) ($ in U.S. millions) 2015 2014 Asset turnover times times Profit margin Return on assets

Answer 1

2015:

Average Total Assets = ($2,911 + $2,593) / 2
Average Total Assets = $2,752

Asset Turnover = Net Sales / Average Total Assets
Asset Turnover = $2,415 / $2,752
Asset Turnover = 0.9 times

Profit Margin = Net Income / Net Sales
Profit Margin = $237 / $2,415
Profit Margin = 0.098 or 9.8%

Return on Assets = Net Income / Average Total Assets
Return on Assets = $237 / $2,752
Return on Assets = 0.086 or 8.6%

2014:

Average Total Assets = ($2,593 + $2,044) / 2
Average Total Assets = $2,318.50

Asset Turnover = Net Sales / Average Total Assets
Asset Turnover = $2,360 / $2,318.50
Asset Turnover = 1.0 times

Profit Margin = Net Income / Net Sales
Profit Margin = $360 / $2,360
Profit Margin = 0.153 or 15.3%

Return on Assets = Net Income / Average Total Assets
Return on Assets = $360 / $2,318.50
Return on Assets = 0.155 or 15.5%