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 s 18,000,000 6,100,000 35,900,000 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.) 1. Margin 2. Turnover 3. ROI

Explanation / Answer

SOLUTION

Margin = Net Operating Income / Sales

= $6,100,000 / $18,000,000 = 33.89%

Turnover = Sales / Average Operating assets

= $18,000,000 / $35,900,000 = 0.50

Return on investment = Margin * Turnover

= 33.89% * 0.50 = 16.95%

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