Homework Answers
WORKING NOTES
1)CALCULATION OF GROSS PROFIT
GP=SALES-COGS=200-90=110
2)CALCULATION OF TOTAL EXPENSES
EXP=LOGISTIC COST+OTHER EXP=20+50=70+TAXES 15=85
NET INCOME=SALE-EXP=200-85=115
PROFIT MARGIN=NET INCOME/SALES REVENUE=115/200=57.5
3)CALCULATION OF ASSET TURNOVER
AT=SALES/ASSETS
TOTAL ASSETS=CURRENT+FIXED; CURRENT ASSETS=CASH+ACCOUNTS RECEIVABLES+INVENTORY+OTHER ASSETS
CURRENT ASSETS=90
TOTAL ASSETS=100+90=190
ASSET TURNOVER=SALES/TOTAL ASSETS=200/190=1.053
RETURN ON ASSET=PROFIT MARGIN*ASSET TURNOVER=57.5*1.053=60.5
RETURN ON ASSET(60.5)
PROFIT MARGIN(57.5) * ASSET TURNOVER(1.053)
NET INCOME/SALES(115/200) SALES/ASSETS(200/190)
NI=GP-EXP ASSETS=FIXED+CURRENT(CASH+
(GP=SALES-COGS),(EXP=LOGISTIC+OTHER+TAX) ACCOUNTS RECEIVABLES+
INVENTORY+OTHER ASSETS
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