Question
In this chapter, we discussed the two components of the ROA ratio (net profit margin and total asset turnover). Using your knowledge of the two
In this chapter, we discussed the two components of the ROA ratio (net profit margin and total asset turnover). Using your knowledge of the two components, find the missing amount in each of the following cases:
Required:
Case 1: ROA is 10 percent; net income is $20,000; the total asset turnover ratio is 5; and net sales are $1,000,000.
What is the amount of average total assets?
Case 2: Net income is $1,500,000; net sales are $8,000,000; and the total asset turnover ratio is 8.
What is the amount of average total assets?
Case 3: ROA is 50 percent; the net profit margin is 10 percent; average total assets are $1,000,000; and the total asset turnover ratio is 5.
What are net sales? (Round your answers to nearest whole number.)
Case 4: Net income is $50,000; the total asset turnover ratio is 5; and net sales are $1,000,000.
What is ROA?
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