Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

The R. M. Smithers Corporation earned an operating profit margin of 11.5 percent

ID: 2736831 • Letter: T

Question

The R. M. Smithers Corporation earned an operating profit margin of 11.5 percent based on sales of $9.8 million and total assets of $5.2 million last year. What was Smithers' total asset turnover ratio? During the coming year, the company's president has set a goal of attaining a total asset turnover of 3.1. How much must firm sales increase, other things being the same, for the goal to be achieved? (State your answer in both dollars and the corresponding percent increase in sales.) What was Smithers' operating return on assets last year? Assuming the firm's operating profit margin remains the same, what will the operating return on assets be next year if the total asset turnover goal is achieved? What was Smithers' total asset turnover ratio? The company's total asset turnover ratio is 1.88. (Round to one decimal place.) During the coming year, the company's president has set a goal of attaining a total asset turnover of 3.1. How much must firm sales increase, other things being the same, for the goal to be achieved? (State your answer in both dollars and the corresponding percent increase in sales.) The firm sales increase must be $ 16.12 million (Round to two decimal places.) or %. (Round to one decimal place.) What was Smithers' operating return on assets last year? The operating return on assets was 21.67 %. (Round to one decimal place.) Assuming the firm's operating profit margin remains the same, what will the operating return on assets be next year if the total asset turnover goal is achieved? The new operating return on assets will be 35.65 %. (Round to one decimal place.)

Explanation / Answer

Answer:a) Total asset turnover = sales /total assets

=$9.8 m/$5.2 m = 1.88 or 1.9 rounded to one decimal

Answer:b)

3.1 = sales/5.2m

Sales= 3.1×5.2m = 16.12 million

Increase in sales = 16.12m – 9.8m = 6.32 m

% increase in sales =(6.32/9.8)*100=64.49% or 64.5 % rounded to one decimal

Answer:c) Operating income return on investment = operating income/total assets

Operating profit margin = operating income/sales

Operating income = 11.5%×9,800,000 = $1,127,000

Operating income return on investment = 1,127,000×100/5,200,000 = 21.67% or 21.7% rounded to one decimal.

Answer:d) If the total asset turnover is achieved, the total sales will be $16.12 million.

Operating income = 11.5%×16.12 m = $1.8538 m

Operating income return on investment = 1.8538×100/5.2 = 35.65% or 35.7% rounded to one decimal

Hire Me For All Your Tutoring Needs
Integrity-first tutoring: clear explanations, guidance, and feedback.
Drop an Email at
drjack9650@gmail.com
Chat Now And Get Quote