The D. A. Winston Corporation earned an operating profit margin of 10 percent based on sales of

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The D. A. Winston Corporation earned an operating profit margin of 10 percent based on sales of $10 million and total assets of $5 million last year.

a. What was Winston's total asset turnover ratio?

b. During the coming year, the company president has set a goal of attaining a total asset turnover of 3.5. How much must firm sales rise, other things being the same, for the goal to be achieved? (State your answer in both dollars and percentage increase in sales.)

c. What was Winston's 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?

Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Foundations Of Finance

ISBN: 9780134083285

9th Edition

Authors: Arthur J. Keown, John H. Martin, J. William Petty

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