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: Sales Net operating income Average operating assets $17,600,000 $4,700,000 $35,700,000 Required: 1. Compute the margin for Alyeska Services Company. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) Margin 2. Compute the turnover for Alyeska Services Company. (Round your answer to 2 decimal places.) Turnover 3. Compute the return on investment (ROI) for Alyeska Services Company. (Round your intermediate calculations to 2 decimal places. Round your percentage answer to 2 decimal places (ie, 0.1234 should be entered as 12.34).) ROI 0

Explanation / Answer

1. Margin = Net operating income / Sales = $4,700,000 / $17,600,000 = 26.70%

2. Turnover = Sales / Average operating assets = $17,600,000 / $35,700,000 = 0.49

3. ROI = Margin x Turnover = 26.70% x 0.49 = 13.08%

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