Required: a. Firm A has a margin of 12%, sales of $540,000, and ROI of 17%. Calc

Question

Required:

a. Firm A has a margin of 12%, sales of $540,000, and ROI of 17%. Calculate the firm's average total assets. (Round "Turnover" to 1 decimal place.)

b. Firm B has net income of $78,000, turnover of 1.2, and average total assets of $860,000. Calculate the firm's sales, margin, and ROI. (Round "Margin" and "ROI" answers to 1 decimal place.)

c. Firm C has net income of $138,000, turnover of 1.91, and ROI of 23.9%. Calculate the firm's margin, sales, and average total assets. (Round "Margin" answers to 1 decimal place and use the rounded answer for the subsequent computations.)

Explanation / Answer

Answer a

Net Income = sales * margin =  $540,000 * 12 % = $64,800

ROI = ( Net Income / Average Total Assets ) = 0.17 (given)

Firm's average total assets = $64,800 / 0.17 = $38,1176.50

Answer b

Assets turnover ratio = Sales / Average total assets

or , Sales = Assets turnover ratio * Average total assets

= 1.2 * $860,000 = $1,032,000

Margin = Net Income / Sales

= $78,000 / $1,032,000 = 7.6 %

ROI =  ( Net Income / Average Total Assets )

= $78,000 / $860,000 = 9.1 %

Answer c

ROI =  ( Net Income / Average Total Assets )

or , Average Total Assets = Net Income / ROI

= $138,000 / 23.9% = $577,405.9

Assets turnover ratio = Sales / Average total assets

or , Sales = Assets turnover ratio * Average total assets

= 1.91 * $577,405.9 = $1,102,845.3

Margin = Net Income / Sales

= $138,000 / $1102845.3 =12.5 %

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.