Alyeska Services Company, a division of a major oil company, provides various se

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:

Required:

1. Compute the margin for Alyeska Services Company. (Round your answer to 2 decimal places.)

2. Compute the turnover for Alyeska Services Company. (Round your answer to 2 decimal places.)

3. Compute the return on investment (ROI) for Alyeska Services Company. (Round your intermediate calculations and final answer to 2 decimal places.)

Sales $ 17,400,000 Net operating income $ 5,600,000 Average operating assets $ 36,600,000 1. Margin 2. Tumover 3. ROI

Explanation / Answer

SOLUTION

1. Margin = Net opearting income / Sales

= $5,600,000 / $17,400,000

= 32.18%

2. Turnover = Sales / Average operating assets

= $17,400,000 / 36,600,000

= 0.47

3. ROI = Margin * Turnover

= 32.18% * 0.48

= 15.45%

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