5. Selected operating data for two divisions of Ashley Company is given below: NORTH SOUTH Sales...
5. Selected operating data for two divisions of Ashley Company is given below:
NORTH SOUTH
Sales 720,000 600,000
Total Assets 360,000 200,000
Fixed Assets 140,000 150,000
Total Liabilities 120,000 140,000
Long-Term Liabilities 80,000 20,000
Net income 72,000 48,000
Calculate ROA, ROE, Profit Margin and Fixed Assets Turnover for both the North and South divisions.
Homework Answers
ROA = Net Income / Total Assets
North:
= 72,000 / 360,000
= 0.20 i.e 20%
South:
= 48,000 / 200,000
= 0.20 i.e 20%
ROE = Net Income / [ Total Assets - Total Liabilities ]
North :
= 72,000 / [ 360,000 - 120,000 ]
= 72,000 / 240,000
= 0.3 i.e 30%
South:
= 48,000 / [ 200,000 - 140,000 ]
= 48,000 / 60,000
= 0.8 i.e 80%
Profit Margin = Net Income / Sales
North:
= 72,000 / 720,000
= 0.10 i.e 10%
South:
48,000 / 600,000
= 0.08 i.e 8%
Fixed Asset Turnover = Sales / Fixed Assets
North:
= 720,000 / 140,000
= 5.14
South:
= 600,000 / 150,000
= 4
Pls comment, if any further assistance is required
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5. Selected operating data for two divisions of Ashley Company
is given below:
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Controllable margin
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$361,100
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Minimum rate of return
13
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14
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8
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