Homework Answers
Profit Margin = 26.00%
Return on Assets = 0.3 times or 30.00%
Inventory Turnover = 8.6 times
Days sales in inventory = 63.66 days
Notes
The formula and calculations are:
Profit Margin = Net Profit/Net Sales = 23400/90000 = 26%
Return on Assets = Net Income/Average Total Assets = 23400/((75000+81000)/2) = 23400/ 78000 = 0.3 or 30%
Inventory Turnover = Cost of Goods Sold/Average Inventory = 51600/((3000+9000)/2) = 8.6
Days sales in inventory = (Ending Inventory*365)/Cost of Goods Sold = (9000*365)/51600 = 63.66 days
Please comment in case of any issue and I will be happy to help.
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