Homework Answers
Solution:
The formula for calculating the Return on Assets (ROA) is = Total Assets Turnover / Profit Margin
= ( Net Income / Sales ) * ( Sales / Average Net Assets )
As per the information given in the question for the Year 2017
( Net Income / Sales ) = 26 % ; ( Sales / Average Net Assets ) = 1.2
Applying the above information in the above formula we have
= 26 % * 1.2
= 31.2 %
Thus the Return on Assets (ROA) for 2017 = 31.2 %
The solution is Option D. 31.2 %
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b. Compute the profit margin (PM) for 2018 and 2017.
Round answers to one decimal place (ex: 0.2345 = 23.5%).
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Round answers to two decimal places.
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a. Compute the return on assets (ROA) for 2018 and 2017. Round
answers to one decimal place (ex: 0.2345 = 23.5%).
b. Compute the profit margin (PM) for 2018 and 2017.
Round answers to one decimal place (ex: 0.2345 = 23.5%).
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Round answers to two decimal places.
d. Which component of ROA (profit margin or asset turnover or
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