Question
Relationships among Return on Assets, Return on Sales, and Asset Turnover A company's return on assets is a function of its ability to turn over
Relationships among Return on Assets, Return on Sales, and Asset Turnover
A company's return on assets is a function of its ability to turn over its investment (asset turnover) and earn a profit on each dollar of sales (return on sales).
Required:
For each of the following independent cases, determine the missing amounts. (Note: Assume in each case that the company has no interest expense; that is, net income is used as the definition of income in all calculations.)
For return on assets (case 1 and 3 only), round raw calculations to 2 decimal places, but enter the answer as a percentage with no decimal places; for example, .178 rounds to .18 and would be entered as 18, indicating 18%.
For all other cases, round to the nearest whole dollar.
Case 1 | |
Net income | $11,500 |
Net sales | $55,200 |
Average total assets | $115,000 |
Return on assets | % |
Case 2 | |
Net income | $61,000 |
Average total assets | $594,100 |
Return on sales | 6% |
Net sales | $ |
Case 3 | |
Average total assets | $94,000 |
Asset turnover | 2 times |
Return on sales | 2% |
Return on assets | % |
Case 4 | |
Return on assets | 13% |
Net sales | $70,000 |
Asset turnover | 1.75 times |
Net income | $ |
Case 5 | |
Return on assets | 9% |
Net income | $3,150 |
Return on sales | 6% |
Average total assets | $ |
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