Exercise 7-19A Calculate ratios (LO7-7) Brad's BBQ reported sales of $840,000 and net income of $38,500....
Exercise 7-19A Calculate ratios (LO7-7)
Brad's BBQ reported sales of $840,000 and net income of $38,500. Brad’s also reported ending total assets of $503,000 and beginning total assets of $396,000.
Required:
Calculate the return on assets, the profit margin, and the asset turnover ratio for Brad's BBQ.
Homework Answers
Return on Assets(ROA)
This ratio measures the profitability of the firm in terms of assets employed in the firm.
Profit Margin
The profit margin is simply the after-tax profit a company generates for each rupee of revenue.
Profitmargin = Net Income/Revenue
= $38,500/$840,000*100
= 4.583%
Assets Turnover
The assets turnover ratio is a measure of how effectively a company converts its assets into sales.
Assets Turnover = Revenue/Total Assets
=$ 840,000/$503,000
= 1.67 times
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Exercise 7-19A Calculate ratios (LO7-7)
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