Calculate the Return on Assets (ROA) for the following company results:

	2019
Net Sales	$10,358,000
Net Income*	935,000
Average Total Assets	8,376,000

*Assume there are no non-recurring items or non-controlling interests

6. Net Profit Margin __________________ / ____________ = _____________

7. Total Asset Turnover __________________ / ____________ = _____________

8. Return on Assets (DuPont) __________________ X ____________ = _____________

9. Compare & Interpret:

a) To answer this question: If the company expects a ROA of 14%, has the company met its

target based on the results above?

Complete the following statement:

The actual return on assets of _____ is _____________ than the expected return of ______%

b) Explain what the results above indicate about managements performance:

Assume Net Profit Margin was planned to be 10.0% and Total Asset Turnover was planned to be 1.4.

1. Net Profit Margin:

2. Total Asset Turnover:

_____10. In the formula for return on investment, interest expense is multiplied by (1 - tax rate), then added to net income. Why is this adjustment made?

1. Interest is not tax deductible
2. Net income is after tax; the numerator must be adjusted to represent all long-term providers of capital
3. Net income is after tax; the numerator must be adjusted to represent only short-term providers of capital
4. Debt is excluded from the denominator to represent common shareholders
5. Dividends are not tax deductible