Question

Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below: Sales Net operating income Average operating assets $ 7,500,000 $ 600,000 $ 5,000,000 Required: 1. Compute the margin for Alyeska Services Company. 2. Compute the turnover for Alyeska Services Company. (Round your answer to 1 decimal place.) 3. Compute the return on investment (ROI) for Alyeska Services Company. (Do not round intermediate calculations.) 1. Margin % 2. Turnover 3. ROI %

Answer 1

1) Margin = Net operating income/Sales = 600000/7500000 = 8%

2) Turnover = Sales/average operating assets = 7500000/5000000 = 1.5

3) ROI = 8*1.5 = 12%