Question
Return on Assets and Asset Turnover Last year, the Miller Company reported a return on assets of 15 percent and an asset turnover of 1.6.
Return on Assets and Asset Turnover Last year, the Miller Company reported a return on assets of 15 percent and an asset turnover of 1.6. In the current year, the company reported a return on assets of 19 percent but an asset turnover of only 1.2.
If sales revenue remained unchanged from last year to the current year, what would explain the two ratio results?
a. Asset turnover decreased, therefore, total assets had to decrease. If total assets decreased, yet the return on assets also increased, then net income also had to increase.
b. Asset turnover decreased, therefore, total assets had to increase. If total assets increased, yet the return on assets also increased, then net income also had to increase.
c. Asset turnover decreased, therefore, total assets had to decrease. If total assets decreased, yet the return on assets also increased, then net income also had to decrease.
d. Asset turnover decreased, therefore, total assets had to increase. If total assets increased, yet the return on assets also increased, then net income also had to decrease.
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