Exercise 11-24 The 2014 Annual Report of Tootsie Roll Industries contains the fo

Question

Exercise 11-24 The 2014 Annual Report of Tootsie Roll Industries contains the following information. (in millions) December 31, 2014 December 31, 2013 Total assets $910.4 $888.4 Total liabilities 219.3 208.1 Net sales 539.9 539.6 Net income 63.2 60.8 Compute the following ratios for Tootsie Roll for 2014. (a) Asset turnover (Round answer to 4 decimal places, e.g. 0.8512 times.) times (b) Return on assets (Round answer to 2 decimal places, e.g. 4.87%.) % (c) Profit margin on sales (Round answer to 3 decimal places, e.g. 4.872%.) %

Explanation / Answer

Average assets = (910.4+888.4)/2= 899.4 a Asset turnover=Sales/Average assets = 539.9/899.4= 0.6003 b Return on assets=Net income/Average assets=63.2/899.4= 7.03% c Profit margin on sales =Net income/Sales = 63.2/539.9= 11.706%

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